November 30, 2015

Adviser Charged with Misleading Perforamce Advertisements About Its Investment Strategies

The SEC brought charges against Alpha Fiduicary, Inc.(AFI), an SEC-registered investment adviser located in Phoenix, Arizona, and Arthur Doglione, its majority owner, managing member, and president of AFI, and until April 2014, its chief compliance officer, in connection with engaging in misleading advertising.

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November 23, 2015

Adviser Charged with Improperly Charging Compliance and Legal Expenses to Private Fund Clients

The SEC brought an enforcement action against Cranshire Capital Advisors, LLC, an Illinois investment adviser, for negligently:   • charging expenses to its private fund clients; and • failing to adopt and implement certain compliance policies and procedures.

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November 19, 2015

Adviser Repeats Custody Rule Violations

The SEC brought an enforcement action against an adviser, two of its owners, and a former chief compliance officer in connection with the adviser violating the custody rule after being reprimanded for violations only a few years before. The custody rule requires firms to obtain independent verification of assets when they can access or control client money or securities so investors know they are protected from misuse or theft.  In 2010, Sands Brothers and its co-founders were subjects of an enforcement action for custody rule violations and agreed to settle the charges by paying a $60,000 penalty.  They had faced new charges in an administrative proceeding instituted in October 2014 when the SEC Enforcement Division alleged the firm was repeatedly late in providing investors with audited financial statements of its private funds.

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November 18, 2015

SEC Proposes New Rules to Increase the Transparency and Enhance the Oversight of Alternative Trading Systems

The SEC proposed new rules addressing alternative trading systems (ATSs) that trade stocks listed on a national securities exchange (NMS stocks), including “dark pools.”  The rules are designed to give investors and other market participants more and better information about how alternative trading systems work by delivering greater transparency to investors and enhancing equity market structure.

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November 16, 2015

Mutual Fund Adviser Charged with Advertising False Performance Data

Virtus Investment Advisers settled SEC charges that it misled mutual fund investors and others with advertisements containing false historical performance data about AlphaSector, a major exchange-traded fund (ETF) portfolio strategy. The SEC found that Virtus publicized a substantially overstated performance track record as received from F-Squared, which it hired as a subadviser for mutual funds and other clients that followed F-Squared’s AlphaSector strategy. According to the SEC,   Virtus falsely stated in client presentations, marketing materials, SEC filings, and other communications that the AlphaSector strategy had a performance history dating back to April 2001 and outperformed the S&P 500 Index for several years.

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November 13, 2015

Portfolio Manager Charged with Insider Trading

The SEC charged Oscar Wu, a portfolio manager for a registered investment adviser based in New York, New York with insider trading. The SEC found that from March 2011 until April 2013 knowingly or recklessly traded on and tipped material non-public information in breach of duties he owed to his…

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November 12, 2015

Wyatt Named Director of OCIE

The SEC named Marc Wyatt as Director of its Office of Compliance Inspections and Examinations (OCIE). In that position, he will also lead the SEC's National Exam Program. OCIE conducts the SEC’s National Exam Program through examinations of SEC-registered investment advisers, investment companies, broker-dealers, self-regulatory organizations, clearing agencies, and transfer…

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November 5, 2015

Adviser Charged with Allocating Its Legal and Compliance Expenses to Fund Clients

The SEC brought an enforcement action Cherokee Investment Partners, LLC, a private equity fund adviser, and an affiliate (Cherokee) that was at all relevant times the manager of two private equity real estate funds with investments in environmentally contaminated property the Funds). The SEC charged Cherokee with improper allocation of…

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November 4, 2015

SEC Enforcement Director Speaks About Compliance Officers

Andrew Ceresney, Director of the SEC's Division of Enforcement, gave a speech at the NSCP's National Annual Conference on his Division's perspective on compliance officers and how it approaches enforcement cases that touch compliance personnel. He noted the concern among compliance officers about recent enforcement actions against compliance personnel in…

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