January 25, 2016

SEC Enforcement Director Discusses the Division’s Focus on Financial Reporting Misconduct

In a keynote address at the Directors Forum 2016, SEC Division of Enforcement Director Andrew Ceresney discussed the Division’s work in the area of issuer reporting and disclosure, noting the importance of aggressively pursuing financial reporting deficiencies.

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January 19, 2016

Commodities Adviser Charged with Overcharging Investors

The SEC brought an enforcement action against Equinox Fund Management LLC, an alternative fund manager based in Denver, Colorado, for overcharging investors and misleading investors about how the firm values fund assets. The SEC stated that Equinox calculated management fees contrary to the method described in registration statements for a managed futures fund called The Frontier Fund (TFF), and the firm also deviated from its disclosed valuation methodology for some TFF holdings.

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January 14, 2016

The SEC and FINRA Release Exam Priorities for 2016

FINRA and the SEC each released their 2016 exam priority lists.   FINRA’s list of priorities is focused on three broad themes: (1) culture, conflicts of interest and ethics; (2) supervision, risk management and controls; and (3) liquidity.

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January 13, 2016

SEC Issues Guidance on the Potential Application of Rule 12b-1 to Certain Sub-Accounting Fee Arrangements

On January 6, 2016, the staff of the SEC’s Division of Investment Management issued guidance (IM Guidance) about when the payment of sub-accounting fees by mutual funds to broker-dealers and other financial intermediaries may raise issues under the Investment Company Act of 1940  if the payments are made outside of Rule 12b-1 distribution plans adopted pursuant to Rule 12b-1 under the 1940 Act.  In the IM Guidance, the SEC staff focuses on whether a portion of such sub-accounting fees paid by the fund is in fact for distribution-related services and, therefore, must be made pursuant to a Rule 12b-1 plan. The SEC staff places the ultimate responsibility for this determination with the mutual fund's board of directors and strongly recommends that the mutual fund's adviser and financial intermediaries that have omnibus accounts with the fund's transfer agent provide the board with sufficient information to make an informed determination about the nature of the services being provided.

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January 11, 2016

OCIE Releases 2016 Examination Priorities

The SEC's Office of Compliance Inspections and Examinations ("OCIE") has released its examination priorities for 2016.  For registered advisers, OCIE exams will focus on:  services offered by advisers to retirement accounts; branch office oversight and supervision; advisory fee arrangements and recommendations of account types; pay-to-play arrangements; cybersecurity compliance and controls;…

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January 8, 2016

AML CCO Liability Case Proceeds

    The Financial Crimes Enforcement Network (FinCEN) brought a $1 million civil money penalty action against former MoneyGram Chief Compliance Officer Thomas Haider. MoneyGram is in the business of wire transfers. MoneyGram had entered into a deferred prosecution agreement with the Department of Justice (DOJ) for violating AML rules. In December, 2014 FinCEN brought an action against Haider seeking to find him individually liable on the ground that he was responsible for implementing and operating MoneyGram’s AML program.

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