October 31, 2012

OCIE Directors Speaks About the SEC’s Exam Program

Carlo V. di Florio, the Director of OCIE, spoke at a NSCP conference in Washington, D.C. about OCIE’s exam program, including conflicts of interest. He began by explaining why conflicts of interest are important to OCIE. The SEC’s National Exam Program (NEP) is built around a risk-based strategy. The SEC has identified conflicts of interest as a key area for its risk analysis. This is based on the experience of its exam program that conflicts of interest, when not eliminated or properly mitigated, are a leading indicator of significant regulatory issues for individual firms, and sometimes even systemic risk for the entire financial system.

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October 29, 2012

Adviser Charged with Making Misleading Performance Claims

The SEC brought an administrative action against against BTS Asset Management, Inc. (BTS), a registered investment adviser located in Lexington, Massachusetts, finding that, from at least the 1990s to 2010, BTS' advertisements for its High Yield Bond Fund Program ("HYP") claimed that the program had experienced no down years since…

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October 23, 2012

Commissioner Gallagher Gives a Speech that Covers the History of the Investment Advisers Act of 1940

SEC Commissioner Daniel Gallagher spoke at a NSCP conference in Washington, D.C. about the effectiveness of the existing regulatory standards of care that apply when brokers and investment advisers provide personalized investment advice to retail customers. He stated that earlier this month, at SIFMA’s Market Structure Conference, he noted…

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October 19, 2012

SEC Issues Notice Indentifying Advisers No Longer Eligible to be Registered with the SEC

The SEC issued a notice identifying 293 advisers who may no longer be eligible for registration with the SEC because they manage less than $100 million of assets or have failed to comply with other SEC requirements. The SEC and state securities authorities coordinated with each other on this initiative.

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October 19, 2012

1500 Hedge Fund Advisers Have Registered Since the Enactment of the Dodd-Frank Act

The SEC reported that 1,504 advisers to hedge funds and other private funds have registered with the SEC since the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated such registration. Including the 2,557 private fund advisers who had registered previously, a total of 4,061 advisers to one or more…

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October 17, 2012

Rules for Security-Based Swap Dealers and Major Security-Based Swap Participants Proposed

The SEC proposed capital, margin, and segregation requirements for security-based swap dealers and major security-based swap participants.  The proposed rules are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which authorizes the SEC and other regulators to put in place a comprehensive framework for regulating the over-the-counter…

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October 9, 2012

SEC Proposes Extending Temporary Principal Trade Rule

The SEC proposed extending the date on which Rule 206(3)-3T under the Advisers Act will sunset from December 31, 2012 to December 31, 2014. Rule 206(3)-3T is a temporary rule that allows investment advisers dually registered as broker-dealers to engage in principal transactions. Without the two year extension, the rule…

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October 9, 2012

SEC Launches Risk-Based Exam Initiative for Newly Registered Hedge Fund Advisers

The SEC's National Examination Program (NEP) launched an initiative to conduct focused, risk-based examinations of newly registered private fund advisers over the next two years.  The letter described the NEP. Next, the letter explained each of the phases of the examination:  engagement, examination and reporting. Click http://www.sec.gov/about/offices/ocie/letter-presence-exams.pdf to…

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October 6, 2012

Division of Investment Management Adds a New Issue of Interest

The SEC’s Division of Investment Management added to its list of issues of interest. In its most recent release, the staff addressed its views on the situation where a fund had separate administration and advisory agreements and its board wanted to combine the terms of each agreement into a single…

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October 3, 2012

SEC Issues Investor Bulletin

The SEC today issued an investor bulletin warning investors to rigorously evaluate a hedge fund investment before making one. The SEC’s investor bulletin on hedge funds was prepared by the Office of Investor Education and Advocacy. It recommends that investors understand a hedge fund’s investment strategy and its use of…

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