July 31, 2013

SEC Issues Form PF Reports

The SEC issued its first “Annual Staff Report Relating to the Use of Data Collected from Private Fund Systemic Risk Reports”. The information contained in the reports is very high level. This is because the SEC only recently received the final initial filings and has not had the opportunity…

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July 31, 2013

SEC Sanctions Two Advisory Firms for Failing to Achieve Best Execution for Clients

The SEC sanctioned two investment advisory firms for failing to seek best execution on client trades placed with their in-house brokerage divisions. According to the SEC, New York-based A.R. Schmeidler & Co. (ARS), which is dually registered as an investment adviser and a broker-dealer, failed to reevaluate whether it was…

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July 30, 2013

CCO Charged with Failure-to-Supervise

The SEC brought failure-to-supervise charges against Ronald S. Rollins of Plainfield, New Jersey. Rollins is the former Chief Compliance Officer of Comprehensive Capital Management, Inc. (CCM), a registered investment adviser firm headquartered in Parsippany, New Jersey.

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July 25, 2013

SAC Portfolio Manager Charged with Insider Trading

The SEC charged a former portfolio manager at S.A.C. Capital Advisors with insider trading ahead of major announcements by technology companies. The SEC alleged that Richard Lee’s illegal trading based on nonpublic information he received from sources with connections to insiders at the technology companies enabled the S.A.C. Capital hedge fund that he managed to generate more than $1.5 million in illegal profits. Lee also made trades in his personal account. The insider trading occurred ahead of public announcements about a Microsoft-Yahoo partnership and the acquisition of 3Com Corporation by Hewlett-Packard.

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July 19, 2013

SEC, European Regulators Establish Supervisory Cooperation Arrangements Related to the Asset Management Industry

The SEC established supervisory arrangements with financial regulators of the member states of the European Union (EU) and the European Economic Area (EEA) as part of long-term strategy to improve the oversight of certain entities in the asset management industry that operate across national borders.

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July 19, 2013

SEC Charges Steven A. Cohen with Failing to Supervise Portfolio Managers and Prevent Insider Trading

The SEC brought charges against hedge fund adviser Steven A. Cohen for failing to supervise two senior employees and preventing them from insider trading under his watch. The SEC alleged that Cohen received highly suspicious information that should have caused any reasonable hedge fund manager to investigate the basis for trades made by two portfolio managers who reported to him – Mathew Martoma and Michael Steinberg. Cohen ignored the red flags and allowed Martoma and Steinberg to execute the trades. Instead of scrutinizing their conduct, Cohen, according to the SEC, praised Steinberg for his role in the suspicious trading and rewarded Martoma with a $9 million bonus for his work. Cohen's hedge funds earned profits and avoided losses of more than $275 million as a result of the illegal trades.

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July 11, 2013

Adviser Charged with Falsifying Records

Cotellessa-Pitz pled guilty before the United States District Court for the Southern District of New York to falsifying the records of a broker-dealer, to falsifying the records of an investment adviser, to causing the filing of false documents with the SEC, and conspiring to falsify the records of a broker-dealer,…

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July 8, 2013

SEC Brings Charge Against Adviser for Fraudulent Forex Scheme

The District of Massachusetts filed a criminal Information against Jeffrey A. Liskov of Plymouth, Massachusetts, charging Liskov with willfully violating Section 206 of the Advisers Act. The SEC previously filed a civil action against Liskov and his advisory firm, EagleEye Asset Management, LLC (EagleEye), for defrauding advisory clients in connection with foreign currency exchange (forex) investments.

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July 3, 2013

New Enforcement Initiatives Directed at Microcap Issuers and Financial Accounting

The SEC commenced the following three initiatives: • The creation of the Financial Reporting and Audit Task Force, which will be dedicated to detecting fraudulent or improper financial reporting, whose work will enhance the Enforcement Division’s ongoing efforts related to accounting and disclosure fraud. • The creation of the Microcap Fraud…

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July 2, 2013

Enforcement’s Asset Management Unit Has Two New Co-Chiefs

The SEC named Julie M. Riewe and Marshall S. Sprung as Co-Chiefs of the Division of Enforcement's Asset Management Unit. This unit focuses on misconduct by investment advisers, investment companies, and private funds. Ms. Riewe and Mr. Sprung have been serving as deputy chiefs of the Asset Management Unit since…

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