On February 4, 2021, the SEC charged three individuals and their affiliated entities with running an alleged Ponzi scheme that raised over $1.7 billion from securities issued by an asset management firm and Registered Investment Adviser (RIA). Approximately 4,000 of the 17,000 retail investors defrauded were seniors. According to the SEC’s complaint, the defendants told investors that they would receive distributions from the profits of the portfolio companies. In fact, many of the payments came from the investors’ own funds.

  On April 16, 2019, the SEC’s Office of Compliance Inspections and Examinations (OCIE) published a Risk Alert dealing with Regulation S-P, which is the Commission’s primary rule governing privacy notices and the safeguarding policies of Registered Investment Advisers (RIAs), as well as broker-dealers. The Risk Alert guidance is derived from recent examinations of RIAs and broker-dealers and is designed to help them develop compliant privacy and opt-out notices to clients who are individuals (“customers”). The Risk Alert will also

Investment advisers may have noticed the SEC’s recent Share Class Selection Disclosure Initiative and thought they had nothing to learn from the 79 enforcement actions. The reality is that even investment advisers who are not affiliated with a broker-dealer can learn valuable lessons from these enforcement actions. Lessons learned from Share Class Selection Disclosure Initiative On March 11, 2019, the SEC announced that its Share Class Selection Disclosure Initiative had returned more than $125 million to investors. The initiative was

The SEC’s Office of Compliance Inspections and Examinations (OCIE) publishes annually its examination priorities to promote transparency and provide insights into the areas it believes pose a heightened risk to investors or to the integrity of the U.S. capital markets. OCIE’s priorities are designed to support the SEC’s mission, which is to protect investors and facilitate capital formation, as well as to maintain fair, orderly, and efficient markets. On December 20, 2018, OCIE announced its 2019 examination priorities. Both the

The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) periodically publishes Risk Alerts to highlight compliance problems discovered during examinations. On October 31, 2018, OCIE circulated a Risk Alert that analyzes compliance issues pertaining to Rule 206(4)-3 under the Investment Advisers Act of 1940, otherwise known as the Cash Solicitation Rule. Generally, investment advisers required to be registered under the Act are prohibited from paying a cash fee, directly or indirectly, to any person who solicits clients for a Registered

We are seeing quite an uptick in Advisors undergoing regulatory exams. Therefore, as a service to you we are providing the following information in regard to regulatory exams. The SEC’s Office of Compliance, Inspections and Examinations (OCIE) is responsible for administering exams. Generally, the initial notification of an exam will reference that the staff of the U.S. Securities and Exchange Commission is conducting an examination of risk factors pursuant to Section 204 of the Investment Advisers Act of 1940 (the