February 20, 2014

OCIE to Focus on Never-Examined Registered Investment Advisers

OCIE, the inspection arm of the SEC, announced the launching of an initiative directed at investment advisers that have never been examined. This initiative will focus on those advisers that have been registered with the SEC for three or more years. OCIE plans to conduct examinations of a significant percentage…

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February 17, 2014

SEC Expands Who Is a Knowledgeable Employee under the 1940 Act

The staff of the SEC’s Division of Investment Management issued a no-action letter to the Managed Funds Association, the trade group for the hedge fund industry, which expands its interpretation of the definition of "Knowledgeable Employee" in Rule 3c-5 under the1940 Act.  Private funds rely on Sections 3(c)(1) or 3(c)(7)…

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February 12, 2014

Unregistered Adviser Hides Trading Losses

The SEC sanctioned Ronald Huxtable, an individual associated with an unregistered investment adviser, for his involvement in a scheme that hid trading losses. In April 2009, Huxtable became a client of an investment adviser not named by the SEC (“Adviser A”) and began participating in Adviser A’s options trading strategy…

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February 11, 2014

No-Action Letter Allows Physical Assets of Registered Investment Companies to be Held at a Non-Bank

The staff of the SEC’s Division of Investment Management issued a providing no-action relief from Section 17(f)(1) of the 1940 Act allowing a registered investment company to place and maintain custody of its gold bullion and other precious metals in a vault or other secure custody facility owned and operated…

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February 4, 2014

Traders Engaged in an Illicit Parking Scheme

Two traders at dually registered broker-dealer/investment adviser firms were charged by the SEC for engaging in a fraudulent “parking” scheme in which one trade temporarily placed securities in the other’s trading book to avoid penalties that would affect his year-end bonus. The SEC alleges that Thomas Gonnella solicited the assistance…

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