January 31, 2014

SEC Releases Its Strategic Plan for Fiscal Years 2014-2018

The SEC issued its “Strategic Plan” for fiscal years 2014-2018.  The plan sets forth the SEC’s mission, vision, values and strategic goals for that time period.

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January 30, 2014

Adviser Charged with Disseminating False and Misleading Advertisements Through Newsletters that It Acquired

The SEC brought an administrative action against Navigator Money Management, Inc. (NMM), and Mark A. Grimaldi, its president, majority owner, and chief compliance officer, alleging that from 2008 through at least January 2012, NMM and Grimaldi directly and indirectly through an affiliated Grimaldi-owned entity, issued false and misleading advertisements concerning:

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January 28, 2014

OCIE Issues Guidance on Due Diligence Process for Selecting Alternative Investments and Their Managers

OCIE issued the following: “Risk Alert: Investment Adviser Due Diligence Process for Selecting Alternative Investments and Their Respective Managers.” The SEC stated that an adviser that exercises discretion to purchase alternative investments on behalf of its clients, or that relies on a manager to perform due diligence of alternative investments, must determine whether such investments:

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January 27, 2014

SEC Chairman Sets SEC Goals in 2014

SEC Chairman Mary Jo White in a speech at the 41st Annual Securities Regulation Institute in Coronado, California set forth the SEC’s goals in 2014. She spoke about the SEC’s Quantitative Analytics Unit, which developed a new instrument called “NEAT,” which stands for “National Exam Analytics Tool.” With NEAT, OCIE examiners are able to access and systematically analyze massive amounts of trading data from firms in a fraction of the time it has taken in years past. In one recent exam, an OCIE exam team used NEAT to analyze in 36 hours literally 17 million transactions executed by one investment adviser.

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January 27, 2014

SEC Brings Enforcement Actions Involving Trading Allocation and Cross Trades

The SEC sanctioned Western Asset Management Company (“Western Asset”), which is a subsidiary of Legg Mason, for concealing investor losses that resulted from a coding error and engaging in cross trading that favored some clients over others. According to the SEC, Western Asset serves as an investment manager primarily to institutional clients, many of which are ERISA plans.  Western Asset breached its fiduciary duty by failing to disclose and promptly correct a coding error that caused the improper allocation of a restricted private investment to the accounts of nearly 100 ERISA clients.  The private investment that was off-limits to ERISA plans had plummeted in value by the time the coding error was discovered, and Western Asset had an obligation to reimburse clients for such losses under the terms of its error correction policy.  Instead, Western Asset failed to notify its ERISA clients until nearly two years later, long after the firm had liquidated the prohibited securities out of those client accounts.

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January 17, 2014

2013 Enforcement Results Released

The SEC announced that the agency’s enforcement actions in fiscal year 2013 resulted in a record $3.4 billion in monetary sanctions ordered against wrongdoers. The SEC filed 686 enforcement actions in the 2013 fiscal year, which ended in September.  This was down from 734 in 2012 and 735 in 2011.

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January 15, 2014

Seward & Kissel Issues an Alert on the Repurchase Agreement Rule and Disclosure Form Amendments Related to NRSROs

Seward & Kissel issued “SEC Adopts Amendments to Remove Certain NRSRO References in Investment Company Rules and Form.” Click here for the alert.

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January 15, 2014

SEC Posts Agenda for Compliance Outreach Program Scheduled for January 30, 2014

The SEC posted the following agenda for its next Compliance Outreach Program at its Washington, D.C.’s headquarters on January 30, 2014: 7:30 am  Registration 8:30 am  Welcoming Remarks — Chair Mary Jo White 8:45 am  Introductory Remarks 9:15 am  Panel I: Program Priorities • Office of…

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January 15, 2014

IM Guidance Update on Fixed Income Securities Risk Management Posted

The SEC’s Division of Investment Management posted IM Guidance Update No. 2014-1, which addresses fixed income securities risk management. The guidance noted the volatility in fixed income markets in June 2013, which was caused by speculation about interest rates. The staff, focusing on mutual funds and ETFs, emphasized the importance…

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January 13, 2014

SEC Delays Compliance Date for Municipal Adviser Registration Until July 1, 2014

The SEC moved the compliance date for municipal adviser registration to July 1, 2014. The SEC approved the final municipal adviser registration rules in 2013, as required by the Dodd-Frank Act. The rules require municipal advisers to register with the SEC if they provide advice to municipal entities or certain…

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