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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June 16, 2016

Administrator to Private Funds Settles SEC Charges of “Gatekeeper” Violations

The SEC announced today that Apex Fund Services (US), Inc. (“Apex”), a fund administrator that provided accounting and administrative services to four private funds managed by ClearPath Wealth Management, LLC (“ClearPath”) and two private funds managed by EquityStar Capital Management, LLC (“EquityStar”) agreed to pay more than $350,000 to settle charges brought by the SEC after it determined that Apex had, in the course of its administrative and fund accounting duties, committed a series of failures and was a cause of Advisers Act violations committed by ClearPath and EquityStar.

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June 8, 2016

SEC Settlement with Morgan Stanley

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), a registered broker-dealer and investment adviser, agreed to pay $1 million to settle administrative proceedings brought by the SEC after it found that, in violation of Regulation S-P, Morgan Stanley failed to adopt written policies and procedures reasonably designed to protect customer records and information. Although Morgan Stanley had established certain policies and restrictions regarding its employees’ access to, and use of, confidential customer data, and implemented certain technology controls designed to prevent employees from copying data onto removable storage devices and from accessing certain websites, the SEC found that the firm failed to ensure that its policies and procedures were reasonably designed and properly operated.

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April 21, 2013

Adviser Fails to Supervise Employee Who Allegedly Forged Checks

The SEC brought an administrative action against Vector Wealth Management, LLC, finding that from October 2008 to May 2011, a clerical employee of Vector forged checks to misappropriate $33,147 of dividends owed to four advisory clients participating in two hedge funds that were managed by Vector.

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April 21, 2013

Adviser Charged with Failing to Implement Adequate Compliance Procedures

The SEC brought an administrative action against Foxhall Capital Management, Inc., based in Virginia, alleging that the firm willfully violated, and its CEO, Co-Chief Investment Officer and CCO willfully aided and abetted and caused Foxhall to violate Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder by failing to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act. Foxhall, according to the SEC, also failed to keep complete and accurate records as required by Section 204 of the Advisers Act and Rule 204-2(a)(3) thereunder, and its CCO aided and abetted and caused Foxhall’s violations of these provisions.

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April 18, 2013

Adviser Charged with Misleading Client Regarding Its AUM

The SEC charged the CEO of Chicago-based investment advisory firm Simran Capital Management with lying to the California Public Employers’ Retirement System (CalPERS) and other current and potential clients about the amount of money managed by the firm.

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