September 30, 2015

CCO Charged with Failing to Supervise an Investment Adviser Representative

The SEC brought an enforcement action against James Goodland, a chief compliance officer of Securus Wealth Management, LLC, an investment adviser, and Securus itself for failing to adopt and implement an adequate system of internal controls with a view toward preventing and detecting violations of the Advisers Act. The SEC found that from January 2010 through July 2013, Securus failed reasonably to supervise Howard Richards, an investment adviser representative associated with Securus whom Goodland directly supervised.

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September 29, 2015

Self-Dealing Charges Brought Against a Hedge Fund Adviser

The SEC charged Lee D. Weiss, Family Endowment Partners, L.P. (FEP) and others with engaging in a pattern of self-dealing and failing to disclose material facts to clients concerning their conflicts of interest, their use of investor funds, and the risks associated with the investments that they recommended or made on behalf of investors in hedge funds they advised.

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September 28, 2015

NASAA Issues Reports on Common Investment Adviser Deficiencies

The North American Securities Administrators Association (NASAA) issued a report on compliance by investment advisers with laws and regulations. State securities regulators have regulatory oversight responsibility for investment advisers with assets under management of less than $100 million. The report stated that books and records continue to be the most…

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September 25, 2015

SEC Proposes Liquidity Management Rules for Mutual Funds and ETFs

The SEC proposed a comprehensive package of rule reforms under the Investment Company Act of 1940 (the "Proposals") to require liquidity risk management programs and related disclosures for open-end management investment companies, including mutual funds and exchange-traded funds (ETFs). The Proposals would also permit, though not require, a fund (other…

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September 22, 2015

Adviser Sanctioned for Having Inadequate Cybersecurity Procedures

The SEC brought an enforcement action against R.T. Jones Capital Equities Management, Inc., an investment adviser based in St. Louis, Missouri, for failing to establish the required cybersecurity policies and procedures in advance of a breach that compromised the personally identifiable information (PII) of approximately 100,000 individuals, including thousands of the firm’s clients. The SEC found that R.T. Jones violated Rule 30(a) of Regulation S-P under the Securities Act of 1933 during a nearly four-year period when it failed to adopt any written policies and procedures to ensure the security and confidentiality of PII and protect it from anticipated threats or unauthorized access.

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September 18, 2015

OCIE Announces Second Round of Cybersecurity Examinations

The SEC’s Office of Compliance Inspections and Examinations (OCIE) announced in its most recent Risk Alert1 that it will continue to focus on cybersecurity by conducting additional examinations of registered broker-dealers and investment advisers. OCIE noted that its second round of cybersecurity examinations, which will involve further testing designed to…

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September 9, 2015

Radio Host Charged with Misrepresenting AUM and Performance

The SEC brought an enforcement action against Bennett Group Financial Services, LLC (Bennett Group), a firm based in Maryland, and Dawn J. Bennett, the firm’s CEO, for grossly inflating the amount of managed assets and exaggerating the investment returns actually obtained for clients. Bennett Group employees were registered representatives associated with Western International Securities, Inc., a broker-dealer registered with the SEC.

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September 4, 2015

Hedge Fund Adviser Accused of Inflating AUM to Increase Its Advisory Fees

The SEC brought an enforcement action against Chris Yoo and his advisory firm Summit Asset Strategies Investment Management (Investment Management), located in Bellevue, Washington, with fraudulently inflating the values of investments in the portfolio of Summit Stable Value Fund (SSVF), a hedge fund, they advised so they could attain unearned management fees. The SEC also charged Raymon Holmdahl, CPA, and Kanako Matsumoto, CPA, accountants for the firm Peterson Sullivan, LLP (Auditors), the fund’s outside auditors, with performing a deficient audit that enabled the firm to send misleading financial statements to investors.

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