Compliance Solutions for Investment Advisers

Monthly Archives: January 2015

Soft Dollar Violations

Back to the SEC administrative action against J.S. Oliver Capital Management and its President, Ian Mausner. Not only were they involved in a Cherry-Picking scheme (see my January 28, 2015 post), but the SEC has alleged that they also misused soft dollars. The SEC also charged Douglas F. Drennan, a portfolio manager at J.S. Oliver, for his

Cherry-Picking

I was reviewing some of the more interesting and relevant SEC Enforcement cases and came across the cherry-picking scheme of J.S. Oliver Capital Management, a San Diego-based investment adviser, and its President, Ian Mausner. According to the SEC complaint, they engaged in a cherry-picking scheme that awarded more profitable trades to hedge funds in which Mausner

Conflicts of Interest

As part of the examination process, the SEC will meet with senior management to discuss how each firm identifies and mitigates conflicts of interest and legal, compliance, financial, and operational risks. This initiative is designed to: (i) evaluate firms’ control environment and “tone at the top,” (ii) understand firms’ approach to conflict and risk management,

Risk Assessment Process

Dear Compliance Professional, As part of the examination process, the SEC meets with senior management to discuss how each advisory firm identifies and mitigates conflicts of interest and legal, compliance, financial, and operational risks. This initiative is designed to: (i) evaluate firms’ control environment and “tone at the top,” (ii) understand firms’ approach to conflict

No Action Letters & Enforcement Actions

On odd pairing indeed. But more closely related than you think. No-Action Letters let advisers know what actions under what specific circumstances are permitted. Enforcement actions let advisers know what actions under what specific circumstances are NOT permitted. Both are incredibly important sources of information for determining the parameters of your compliance obligations.

Compliance Training

Dear Compliance Professional, One of the best ways an investment adviser can show regulators that they have instilled a strong culture of compliance is through compliance training. And yet, based on the number inquiries we receive on the topic, advisers seem to continually struggle with how to provide their supervised persons with the requisite compliance

What is Compliance

Because sometimes we forget, here is an excellent description from an interview with Odell Guyton of Jabil, Inc. in the Wall Street Journal. Mr. Jabil is also a co-founder and board member of the Society for Corporate Compliance and Ethics. Compliance is developing and implementing processes and procedures so that the company can run smoothly while

SEC Exam Priorities 2015

The SEC today announced its Office of Compliance Inspections and Examinations’ (commonly known as OCIE) priorities for 2015 which focus on three areas: protecting retail investors, especially those saving for or in retirement; assessing market-wide risks; and using data analytics to identify signs of potential illegal activity. Unlike in past years, the information for investment advisers

Important Lessons for SEC Advisers

Sometimes investment advisers busted by the SEC for intentional actions can offer lessons for their more law-abiding brethren. Two actions against investment advisers and certain of their executives are a case in point. One firm allegedly engaged in thousands of principal transactions through an affiliated brokerage firm without informing their clients. The other firm and

Quarterly Transaction Reports

All Access Persons must submit personal securities transaction reports no later than thirty (30) days after the end of each calendar quarter. The information contained in the Transactions Report must cover all transactions made by the Access Person during that quarter. An Access Person may provide monthly account statements and duplicate trade confirmations in lieu

Disclosure Basics

Beyond lack of disclosures, beyond incomplete disclosures and even beyond failure to disclose conflicts of interest, the most problematic disclosure issue is when there are discrepancies between an adviser’s disclosure documents. Examiners take an especially harsh view of investment advisers that fail to reconcile their disclosure documents. In the words of one examiner, the presence of conflicting disclosure documents is evidence that

ADV 2A Delivery Requirements

Advisers still seem a bit befuddled (what a great word) by the annual delivery requirements for their firm brochure (i.e., ADV Part 2A). These are the possible scenarios: If there are no material changes, you can merely offer (in writing) to provide each client with a copy of your ADV 2A if they so desire.

Compliance Resolutions

Dear Compliance Professional, Happy New Year. Alas, it is only day 2 of the new year and I have already broken 80% of my resolutions (sadly, this is actually an improvement on last year’s efforts). Fortunately for you, however, the remaining 20% all involve ways I can help you understand and satisfy your compliance obligations.

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