April 16, 2010

SEC Denies 13(f) Request for an Exemptive Order

The SEC declined to issue an exemptive order to Wynnefield Capital Management LLC and Wynnefield Capital, Inc. (Wynnefield), which are investment managers of certain private investment companies, that would have kept certain information filed in a Form 13F filing confidential.

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April 15, 2010

SEC Charges California-Based Investment Adviser for Operating a Fraudulent Scheme

The SEC charged Richard H. Nickles of Dana Point, California, and his three companies, Innovative Advisory Services, Inc., Innovative Advisory Services LLC, and Island Trader LLC, all of which operate from Santa Ana, California, with engaging in a fraudulent advisory scheme.  The SEC alleged that since March 2009, Nickles had raised approximately $3 million through advertisements in prominent newspapers for investments that were purportedly insured or U.S. Government guaranteed. In reality, the SEC stated that Nickles did not invest the funds as promised.

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April 13, 2010

Adviser Charged with Making Misrepresentations

The SEC charged Haberman Management Corp. (HMC), a former registered investment adviser based in New York, New York, Haberman Value Fund, L.P. (HVF) and Ross L. Haberman with violating the anti-fraud provisions of the Securities Exchange Act of 1934 (Exchange Act) and the Investment Advisers Act of 1940 (Advisers Act).

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April 8, 2010

SEC Charges Minnesota Investment Advisor With Fraud

The United States District Court for the District of Minnesota issued a temporary restraining order and asset freeze against Renee Marie Brown (Brown), a Minnesota-based investment adviser, and Investors Income Fund X, LLC (Fund X), a company formed and controlled by Brown.

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April 7, 2010

Morgan Keegan Funds Adviser Charged with Fraud Involving Portfolio Valuation

The SEC charged Morgan Asset Management, Inc. (Morgan Asset), Morgan Keegan & Company, Inc. (Morgan Keegan), James C. Kelsoe, Jr. (Kelsoe), and Joseph Thompson Weller, CPA (Weller) with various violations under the securities laws.  The SEC alleged that during various periods between at least January 2007 and July 2007, the daily net asset value (NAV) of each of five registered investment companies--then known as the Morgan Keegan Select Fund, Inc., the RMK High Income Fund, Inc., the RMK Multi-Sector High Income Fund, Inc., the RMK Strategic Income Fund, Inc., and the RMK Advantage Income Fund, Inc., (collectively, the Funds) was materially inflated as a result of the fraudulent conduct by them.

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April 7, 2010

Adviser Charged with Illegal Brokerage Arrangement

The SEC brought an administrative action against Brian Travis, finding that between at least March 2003 and October 2005, he worked as a back-office clerk at JLF Asset Management, LLC (JLF), an unregistered investment adviser to three hedge funds.

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March 31, 2010

SEC Appoints Agency’s First “Chief Compliance Officer”

The SEC appointed Kathleen M. Griffin as its first Chief Compliance Officer.  The purpose of the new position is to strengthen the SEC's internal compliance program.  The position was created to streamline and centralize oversight responsibility for employee securities transactions and financial disclosure reporting.  Ms. Griffin will head a new compliance unit within the SEC's Office of Ethics Counsel.

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March 29, 2010

Supreme Court Issues Jones v. Harris Opinion

The United States Supreme Court upheld the Gartenberg standard as the appropriate approach for courts and boards of directors to review mutual fund investment advisory contracts and fees. Click http://xlo3.wpengine.com/files/Publication/76c9f34c-f815-44c0-ae01-63039980b95e/Presentation/PublicationAttachment/506b2911-4f57-4772-8452-741bec682729/Supreme%20Court%20Upholds%20Gartenberg%20Standards.pdf to access a Seward & Kissel Alert on this decision.

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March 29, 2010

SEC Brings Charges Against Unregistered Investment Adviser

The SEC brought fraud charges against Enrique F. Villalba, Jr., of Cuyahoga Falls, Ohio, for allegedly misrepresenting the safety and nature of his investment strategy, and for misappropriating millions of dollars of client funds.  Villalba is an unregistered investment adviser.

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March 26, 2010

Two Investment Adviser Employees Settle Fraud Charges

The SEC settled fraud charges that it had brought against Brian Travis and Nicholas Vulpis, two investment adviser employees for JLF Asset Management LLC (JLF).

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