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Consider starting Annual Compliance Review (if not already completed for the year)

Reference: SEC Guidance

Fiduciary Stds Developments—June 2018

Given its importance, we’re republishing our May update. A federal court has essentially struck down the DoL Fiduciary Standard. No appeal was made. Meanwhile, the SEC has proposed two things: (1) a “Best Interest” Standard for Broker-Dealers (and certain advisers); and (2) Form CRS which would require brokers and advisers…

Lucia v. SEC:  Supreme Court Holds SEC’s Past Hiring of Administrative Judges Unconstitutional

On June 21, 2018, the U.S. Supreme Court ruled in the appeal of the Lucia v. SEC case which has worked its way through the courts the past several years. In essence, the Supreme Court determined that the SEC’s old administrative law judges (“ALJs”) hiring practice was unconstitutional. In recent…

Updated Custody Q&A

The SEC’s Div. of Investment Mgmt. has updated its custody Q&A page on its website. The updates primarily address advisers continuing questions and challenges regarding what is termed “inadvertent custody.,” The press release which is linked to in the heading above, details specifically the additions to the Q&A for your…

Adviser Fails to Disclose to Clients a Conflict of Interest

The SEC found that an investment adviser recommended a security without disclosure to its client that it had a financial interest in the issuer of the security. The SEC stated that Larry Werbel from at least 2011 through 2014 introduced his clients to VGTel, Inc. and informed them that VGTel…

SEC to Allow Electronic Posting of Mutual Fund and ETF Reports

The SEC adopted Rule 30e‑3 under the 1940 Act, which provides an optional “notice and access” method to allow funds to satisfy their obligations to transmit shareholder reports. Subject to conditions in the rule, a fund may make its reports and other required materials publicly accessible at a specified website…

French-Owned Adviser Fails to Disclose Side Letter

The SEC brought an enforcement action against Lyxor Asset Management, Inc. to disclose conflicts of interest. The SEC found that Lyxor, an investment adviser, to certain of its clients arising from an agreement (Side Letter) between Lyxor and two affiliated outside asset managers (Third Party Advisers). The Side Letter called…

U.K. Adviser Fails to Disclose Compensation Earned in Recommended Third-Party Product

The SEC brought an enforcement action against deVere USA, Inc. (DVU) for failing to make full and fair disclosure to clients and prospective clients of material conflicts of interest regarding compensation obtained from third-party product and service providers. DVU’s clients are primarily U.S. residents or citizens who held U.K. defined…

SEC Brings a Number of Failure to File Form PF Filing Enforcement Actions

The SEC brought a number of enforcement actions against investment advisers for failing to file Form PFs, which violated the reporting provisions of Rule 204(b)-1 under the Advisers Act. Rule 204(b)-1(a) requires an investment adviser to complete and file a report on Form PF if the investment adviser: (1) is…