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).

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October 22, 2018

SEC Charges Firm With Deficient Cybersecurity Procedures

On September 26, 2018, the SEC announced that it settled charges against a broker-dealer/investment adviser related to its failures to adopt and implement adequate cybersecurity policies and procedures. The failures were identified in connection with a cyber intrusion that compromised personal information of thousands of customers. The firm agreed to be censured and pay a $1 million penalty.

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September 18, 2018

Massachusetts Financial Services to Pay a $1.9 Million Civil Penalty for the Use of Misleading Marketing Materials

On August 31, 2018, the SEC announced that it settled charges against Massachusetts Financial Services related to allegations that it failed to disclose that some of its product marketing materials for its blended research equity strategy presented hypothetical back-tested portfolio results.

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September 18, 2018

Transamerica Entities to Pay $97 Million to Investors Relating to Errors in Quantitative Investment Models

On August 27, 2018, the SEC announced that it settled charges against four Transamerica-related entities for misconduct involving reliance on faulty investment models and ordered the entities to refund $97 million to misled retail investors.

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February 5, 2018

SEC sanctions Gemini Fund Services for inflated NAV

Last week, the SEC instituted cease-and-desist proceedings pursuant to Section 203(k) of the Investment Advisers Act against Gemini Fund Services for its calculation of an inflated NAV when it was aware of inconsistencies with the custodian bank’s records.

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March 31, 2017

Investment Adviser Sanctioned for Failure to Disclose Conflicted Revenue Arrangements

The SEC recently settled charges against an investment adviser (the "Adviser") for failing to disclose to its clients compensation it received through arrangements with a third-party broker-dealer (the "Broker") and the resulting conflicts of interest.

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December 20, 2016

Two Firms Settle with SEC over Improper Valuations of Bonds

Two recent settlements between investment advisers and the Securities and Exchange Commission (“SEC”) demonstrate the importance of correctly valuing bonds within a fund’s portfolio and ensuring that the valuation methods used take into account all factors that affect a bond’s value.  Failure to do so can result in an inflated NAV, which can lead to disgorgement, heavy penalties and shareholder reimbursements.

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September 26, 2016

Two Firms Charged with Compliance Failures in Wrap Fee Programs

The Securities and Exchange Commission ("SEC") recently announced that it settled charges with two investment advisory firms related to compliance failures within their wrap fee programs. For violations of Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder, the firms agreed to pay penalties of $600,000 and $250,000, respectively.

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August 31, 2016

Investment Adviser Settles Charges of Failing to Disclose Key Terms in Application for Exemptive Relief

The Securities and Exchange Commission (“SEC”) recently announced its settlement of charges against a registered investment adviser (the “Adviser”) for failing to disclose material terms in, among other documents filed with the SEC, an application for exemptive relief.  The SEC determined that the Adviser had violated Section 34(b) of the Investment Company Act of 1940, as amended (the “1940 Act”), by not disclosing a side agreement with a subadviser, the terms of which were inconsistent with concerns raised by the SEC’s Division of Investment Management (the “Staff”) in its review of the application.

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June 21, 2016

SEC Sanctions Investment Adviser for Failing to Establish and Maintain Policies and Procedures to Prevent the Misuse of Material Nonpublic Information

On May 27, 2016, the SEC sanctioned an investment adviser (the "Adviser") for failing to establish and maintain policies and procedures reasonably designed to prevent the misuse of material nonpublic information.1 Specifically, the Adviser failed to adopt and implement policies and procedures for identifying outside consultants who, based on their functional roles and access to confidential information regarding the Adviser's transactions, should be subject to the Adviser's policies and procedures, including its code of ethics.

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