July 8, 2020
Registered Fund Adviser and Affiliate Censured and Fined for Violations of Section 12(d)(1)(A) (Fund of Funds Limitations) and Compliance Rules
On July 2, 2020, the SEC entered into a settlement order with an adviser and its foreign affiliate (Order) involving violations of the fund-of-funds ownership restrictions in Section 12(d)(1)(A) of the 1940 Act and the compliance rules contained in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Advisers…
May 21, 2020
SEC Charges Three Former Audit Firm Partners for Exam Sharing Misconduct
On May 18, 2020, the SEC entered into settlement agreements with three former partners of an independent public accounting firm (Firm) in connection with the partners’ conduct involving improperly receiving and sharing information about internal continuing professional education exams conducted by the Firm. The former partners participated in soliciting or…
May 4, 2020
SEC Fines Fund Adviser for Overvaluing its Securities and Misleading Performance Disclosures
On April 28, 2020, the SEC fined a fund’s adviser in a consent order (Order) for the adviser’s conduct involving the fund’s overvaluation of its securities and the adviser’s misleading statements about the fund’s performance in shareholder communications. The fund primarily invested in non-agency mortgage-backed securities (NA MBS) and, during…
March 12, 2020
Broker-Dealer Entities Fined $35 Million for Violations Relating to Inverse ETF Recommendations to Retail Investors
The SEC recently fined two dual registrant broker-dealers $35 million for violations involving inadequate compliance policies and procedures, unsuitable recommendations and failure to supervise arising out of recommendations to certain retail investors that invested in single-inverse ETFs. Single-inverse ETFs are ETFs that seek returns that are the opposite of the…
October 23, 2019
SEC Staff Issues Frequently Asked Questions Regarding Disclosure of Certain Financial Conflicts Related to Investment Adviser Compensation
On October 18, 2019, the SEC staff issued frequently asked questions (FAQ) about required disclosures of conflicts related to compensation advisers receive, such as 12b-1 fees and revenue sharing, for recommending certain investment products. In the FAQ, the staff of the Division of Investment Management discusses…
October 1, 2019
SEC Orders an Additional 16 Self-Reporting Advisory Firms to Pay Nearly $10 Million to Investors
On September 30, 2019, the SEC announced it settled charges against 17 investment advisers for disclosure failures regarding their mutual fund share class selection practices. The firms include 16 advisers that self-reported as part of the Division of Enforcement’s Share Class Selection Disclosure Initiative (Initiative) and one adviser that did…
September 23, 2019
Advisers Fined $5 Million for Disclosure and Compliance Violations Related to Securities Lending and Unreimbursed Tax Expenses for Mutual Fund Clients
On September 16, 2019, the SEC issued a settled order describing violations of the Investment Advisers Act of 1940 (“Advisers Act”) and rules thereunder by two registered advisers for undisclosed conflicts of interest and misleading disclosures relating to certain securities lending practices, and misleading disclosures and deficient policies and procedures…
September 16, 2019
SEC Charges BDC Adviser with Affiliated Transaction Violations and Noncompliance with Co-Investment Exemptive Order
On September 13, 2019, the SEC issued a consent order that named Garrison Investment Group LP (“GIG”) and Garrison Capital Advisers LLC (“GCA”) and found violations of the affiliated transaction prohibitions of the Investment Company Act of 1940 (“1940 Act”) and the custody rule under the Investment Advisers Act of…
September 5, 2019
SEC Continues to Pursue Share Class Selection Cases
Two separate complaints filed last month against Cetera Advisors, LLC (“Cetera”) and Commonwealth Financial Network (“Commonwealth”) show that the SEC is still pursuing intermediaries for conflicts of interest and related violations related to fund share class selection. The complaints against Cetera and…
November 15, 2018
SEC’s Office of Compliance Inspections and Examinations Issues Risk Alert Announcing Examination Initiatives Focused on Registered Investment Companies
On November 8, 2018, the staff of the SEC’s Office of Compliance Inspections and Examinations issued a Risk Alert indicating that it is conducting a series of examination initiatives focused on matters relevant to certain mutual funds and exchange-traded funds (ETFs).