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Monthly Archives: September 2011
SEC Charges Adviser in Soft Dollar Fraud
The SEC charged an investment advisor with fraud for lying to clients about how brokerage commission rebates, or “soft dollars,” were being used and producing phony documents to cover up the fraud during an SEC examination. The SEC alleges that Kurt Hovan of Hovan Capital Management misappropriated more than $178,000 he claimed to be using
SEC Head Honcho Backs SRO for Advisers
A proposal to turn over the supervision of financial advisers to a self-regulatory organization (SRO) gained the support of SEC Chairperson Mary Schapiro. The SEC has the resources to conduct annual examinations of only 9% of U.S. registered advisers, who number nearly 12,000, she said. “Unless there is sufficient funding for the SEC to do
SEC Postpones Fiduciary Rules
The SEC (and the Department of Labor) postponed efforts to extend a fiduciary standard to more financial advisers. “It’s extremely unlikely that there will be a rule this year,” an SEC official says.
Compliance Alert! Data Security
Dear Compliance Professional, The protection of a client’s non-public personal information is one of the most important tasks entrusted to an investment adviser. Unfortunately, it is also one of the most vexing issues confronting compliance professionals. Any time an adviser stores non-public personal information on a computer that is connected to the Internet, transmits such
Changes to ADV Part 1 – Item 5
Item 5 is the part of the ADV 1 that requests information about an investment adviser’s business, including information about employees, clients and advisory activities. Again, these changes are part of the SEC’s goal to collect more and more information about advisers in the hopes of correctly assessing their risk profile. The key amendments to
Social Media
Following a recent survey of state-registered investment advisers, the Massachusetts Division of Securities has determined that additional regulatory guidance concerning the use of social media is necessary. The Survey required responses to a variety of questions as to each investment adviser’s use of social media (including Facebook, LinkedIn, Twitter, as well as other media), the
Changes to ADV 1 – “Mid-Sized” Advisers
The revised Instructions to Item 2 in the ADV Part 1 requires certain “mid-sized” advisers (e.g., those advisers with between $25 million and $100 million in regulatory AUM) to remain registered with the SEC. The Instructions state that a mid-sized adviser must register (or remain registered) with the SEC if they meet at least one
Some Inside Scoop – Part 2
I spoke with a senior state regulator who told me point blank that the best thing I can tell clients who need to transition from SEC to state registration due to the increased AUM threshold, is start early. She said if you know you need to transition – e.g., you are nowhere close to the
Changes to ADV Part 1 – “Large Advisers”
My previous post discussed the new range of choices in Item 2 for SEC registration. While most of the options were already familiar, the “large adviser” and “mid-sized” adviser options were new. This post discusses the attendant changes to the ADV 1 Instructions regarding the “large adviser” option for SEC registration (the next post will
Changes to ADV Part 1 – Item 2
Item 2 is the section of Form ADV Part 1 that determines whether an adviser is eligible to register (or remain registered) with the SEC. To implement the new prohibition on registration for mid-sized advisers (e.g., those advisers with between $25 million and $100 million in regulatory AUM), Item 2.A. has been amended to reflect
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