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Investment Advisers

Mar 15, 2022

Maximizing the Fee: Royal Bank of Canada Affiliate Pays $30+ Million for Client Abuse

On Thursday, March 3, 2022, the U.S. Securities and Exchange Commission (“SEC”) announced that City National Rochdale, LLC (“CNR”), a Delaware statutory trust sponsoring proprietary mutual funds and serving as their investment adviser, agreed to pay $30,361,803 to settle charges brought by the SEC that the trust had failed to disclose conflicts of interest that defrauded current and prospective clients.» Read More

Sep 02, 2021

Which Side Are You On? Municipal Broker/Dealer Takes Both Sides

On Aug. 26, 2021, the U.S. Securities and Exchange Commission (“SEC”) instituted enforcement proceedings against Rush F. Harding III, the 65-year-old co-founder of Crews & Associates, Inc. (“Crews”), a Little Rock, Arkansas, broker/dealer and municipal advisor, and against Crews for unfair dealings in the bonds of Ohio County, West Virginia.» Read More

May 18, 2021

Raising the Bar: SEC to Propose Increased Thresholds for Performance-Based Fees

On Monday, May 10, 2021, the U.S. Securities and Exchange Commission (“SEC”) issued a Notice of Intent to Issue an Order that “would adjust for inflation dollar amount thresholds in the rule under the Investment Advisers Act of 1940 (the “1940 Act”), which permits investment advisers to charge performance-based fees” to certain clients.» Read More

Apr 13, 2021

Who Are You and How Much Are You Paid? MSRB Proposes Regulation of Solicitor Municipal Advisors

On Wednesday, March 17, 2021, the Municipal Securities Rulemaking Board (“MSRB”) proposed new Rule G-46 to codify the “fair dealing …obligations” of “solicitor municipal advisors” (“SAM’s;” not to be confused with Surface to Air Missiles). The MSRB Notice states that municipal advisors generally and SAM’s, in particular, were not subject to regulatory oversight until the Dodd-Frank Act was passed in 2010 in response to the Great Recession of 2007-2009.» Read More

Jan 28, 2021

Speaking with Divided Minds: The SEC “Modernizes” Investment Adviser Advertising

On December 22, 2020, the U.S. Securities and Exchange Commission (“SEC”) unanimously adopted a NEW Rule 206(4)-1 under the Investment Advisers Act of 1940, as amended (the ”IA Act”), replacing old Rule 206(4)-1 originally adopted in 1961, and also eliminating Rule 206(4)-3 originally adopted in 1979.» Read More

Jan 14, 2021

Taming the Elephants: SEC Jumbo Trader Risk Alert

On December 16, 2020, the U.S. Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE,” since reorganized as a separate division of the SEC, i.e., the Division of Examinations [“DivEx”]) issued a Risk Alert entitled “Observations from Examinations of Broker-Dealers and Investment Advisers: Large Trader Obligations.”» Read More

Jan 05, 2021

Felling Goliaths: ICE, Prudential, and the SEC Slingshot

On December 9, 2020, the U.S. Securities and Exchange Commission (“SEC”) in Release No. 5643 under the Investment Advisers Act of 1940 (the “Advisers Act”) announced the institution of an enforcement action against ICE Data Pricing & Reference Data, LLC (“PRD”) and simultaneously the settlement by PRD in which PRD was ordered to cease and desist from violative activity, was censured and was ordered to pay a civil penalty of $8,000,000.» Read More

Dec 15, 2020

When the CCO Is Not Compliant: Failure To Have Independent Testing of Broker/Dealer AML Compliance

Broker/dealers, which function as intermediaries between buyers and sellers of securities, are registered with and regulated by both the U.S. Securities and Exchange Commission (“SEC”) and the Financial institution Regulatory Authority (“FINRA”). They may also be subject to regulatory requirements as part of having trading privileges by particular exchanges such as the NYSE and NASDAQRead More

Dec 08, 2020

Meeting Specified Standards: the SEC’s OCIE Assesses Compliance

The Fall of 2020 has been a time of particular focus on “compliance” by the U.S. Securities and Exchange Commission (“SEC”), and specifically by its Office of Compliance Inspections and Examinations (“OCIE”). On September 15, 2020, the OCIE issued a Risk Alert warning registered investment advisers and broker/dealers to improve their cybersecurity protocols to guard against unauthorized intrusion in customer accounts, especially intrusion using a technique called “Credential Stuffing.”» Read More