February 27, 2012

Charges Brought Against Individuals in High-Yield Promissory Note Scheme

The SEC brought administrative actions against Thomas R. Fry, Bevan J. Wilde, Gary W. Hansen, Michael G. Butcher, James B. Mooring, and Michael W. Averett, who were found to have, among other things, offered and sold purported high-yield promissory notes to investors using private placement memoranda that falsely stated that…

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February 27, 2012

SEC Issues Risk Alert on Unauthorized Trading

The SEC’s Office of Compliance Inspections and Examinations (OCIE) issued an alert entitled “Strengthening Practices for Preventing and Detecting Unauthorized Trading and Similar Activities,” intended to help investment advisers assess compliance and supervisory controls to detect and deter unauthorized trading.  The alert notes that changes in trading patterns, a high…

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February 27, 2012

Identity Theft Rules Proposed

The CFTC and SEC jointly proposed rules designed to protect investors from identity theft by ensuring that broker-dealers, mutual funds, and other SEC-regulated entities create programs to detect and respond appropriately to red flags.  The rules are promulgated under the Fair Credit Reporting Act of 1970 (“FCRA”), which sets standards…

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February 24, 2012

SEC Disseminates Valuation Sweep Letter to Private Equity Fund Advisers

2.22.2012  The SEC has been sending a sweep letter to private equity fund advisers focusing on valuation issues, including how assets of the private fund are valued.  It has been speculated that the primary purpose of the sweep letter…

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February 24, 2012

Seward & Kissel Posts Memo Regarding Revised Performance Compensation Rule

Seward & Kissel posted a memo about recently amended Rule 205-3 under the Investment Advisers Act of 1940.  The amendment, among other things, raised the dollar amounts of the assets under management test and the net worth test contained in that Rule.Click http://xlo3.wpengine.com/pubs/xprPubDetail.aspx?xpST=PubDetail&pub=414 to access the memo.

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February 24, 2012

Chairman Speaks at PLI’s “SEC Speaks” Conference

Mary L. Shapiro, Chairman of the SEC, spoke at PLI’s “SEC Speaks” conference on a variety of issues, including the SEC’s money market fund reform initiative.  Ms. Shapiro identified money market funds as a high-profile area of interest for the SEC, citing their susceptibility to runs and to a sudden…

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February 17, 2012

SEC Charges Expert Consulting Firm and Owner with Insider Trading

The SEC charged John Kinnucan and his Portland, Oregon-based expert consulting firm Broadband Research Corporation with insider trading.  The charges stem from the SEC’s ongoing investigation of insider trading involving expert networks. In a parallel criminal case, Kinnucan has been arrested and charged with one count of securities fraud and…

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February 16, 2012

SEC Charges Investment Adviser Representative with Aiding a Ponzi Scheme

The SEC charged Michelle W. Palm with directing money into a Ponzi scheme operated by Thomas J. Petters (Petters) by selling interests in funds operated by Arrowhead Capital Management LLC (Arrowhead) to investors. Petters promised investors that their money would be used to finance the purchase of consumer electronics that…

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February 15, 2012

SEC Tightens Rules on Advisory Performance Fee Charges

The SEC raised the net worth requirement for investors who pay performance fees, by excluding the value of the investor’s home from the net worth calculation.  Under Rule 205-3 under the Investment Advisers Act of 1940, investment advisers may charge clients performance fees if the client’s net worth or assets…

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February 15, 2012

SEC Charges Investment Adviser with Fraud

The SEC charged Robert Pinkas, an investment adviser, with committing fraud and violating his investment adviser bar.  The SEC alleges that Pinkas misappropriated funds from an advisory client to pay legal defense and settlement costs arising from an unrelated SEC investigation. The SEC also alleges that Pinkas made material misrepresentations…

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