August 26, 2014

Adviser Acquisition Fueled by Client Investments Found to be Fraudulent

The SEC brought an administrative action against PageOne Financial, Inc. (PageOne), an investment adviser, and Edgar R. Page (E. Page), its principal owner, for, among other things, hiding serious conflicts of interest from their advisory clients in connection with recommending investments in three private investment funds (Private Funds). In late…

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August 15, 2014

SEC to Extend “Temporary” Broker-Dealer Principal Trade Rule for Another Two Years

The SEC has proposed to amend Rule 206(3)-3T under the Advisers Act, a temporary rule that establishes an alternative means for dually registered investment advisers/ broker-dealers to meet the requirements of Section 206(3) of the Advisers Act when acting in a principal capacity in transactions with their advisory clients. The amendment would extend the date on which Rule 206(3)-3T will sunset from December 31, 2014 to December 31, 2016.

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August 15, 2014

OCIE to Commence Sweep Exam of Firms Offering Liquid Alt Funds

OCIE, the inspection arm of the SEC, will begin later this summer or early fall a sweep examination of alternative mutual funds (sometimes called “liquid alt funds”) that focuses on, among other things, liquidity, leverage and board oversight of the funds. An estimated $300 billion are invested in liquid alt funds, which represents significant growth over the past couple of years.

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August 14, 2014

SEC Brings Fund of ETFs Case

The SEC brought an administrative action against Keith MacDonald Summers, the manager of Tricoastal Capital Partners, LLC (TCP Fund),  for, among other things, soliciting investors by lying to them about TCP Fund’s assets under management (AUM), the intended use of its assets, TCP Fund’s historic performance and concealing trading losses from investors.Summers was the managing member of TCP Fund, a private fund, and the sole principal and director of Tricoastal Capital Management Ltd., an unregistered investment advisory firm.

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August 13, 2014

Adviser Charged with Improperly Converting His Brokerage Customers Into Advisory Clients

A federal court jury in Boston, Massachusetts, returned a verdict against registered investment adviser Sage Advisory Group, LLC, and its principal, Benjamin Lee Grant, both of Boston, in a fraud case filed by the SEC. The SEC found that starting on or about October 4, 2005, Grant engaged in a scheme to induce his former brokerage customers to transfer their assets to Sage, his new advisory firm.

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August 1, 2014

Treasury Proposes Customer Due Diligence Rules

The Financial Crimes Enforcement Network (FinCEN) Department of the U.S. Treasury recently issued a notice of proposed rulemaking regarding customer due diligence (CDD) requirements for covered financial institutions, which will include mutual funds.  The proposed rule clarifies existing regulations within the customer identification program (CIP) and anti-money laundering (AML) procedures, and introduces a new rule that will require covered institutions to identify and verify beneficial owners of legal entity customers. 

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