Two recent SEC enforcement cases highlight the importance of registered investment advisers presenting true and accurate records to the Commission. While the facts of each case differ, they show that the documents’ falsification is worse than their insufficiency. In the first case, a CCO allegedly submitted around 170 falsified forms…
On July 29, the North American Securities Administrators Association (“NASAA”) proposed amendments to four model investment adviser rules and requested comments, with the comment period ending August 28, 2025. NASAA’s model rules are not binding until formally adopted by the individual state securities administrator. With this proposal, NASAA intends to…
Both the SEC and the U.S. Department of the Treasury’s Financial Crime Enforcement Network (“FinCEN”) recently announced actions to delay or remove pending regulations that would have increased compliance obligations for RIAs. FinCEN announced that it was postponing the effective date of final rules regarding investment advisers’ obligations under anti-money…
The SEC recently settled cherry-picking charges against a Minnesota investment adviser and its sole owner. North East Asset Management Group and its owner, Gregory Zandlo, settled the Commission’s claims without admitting or denying its findings. The SEC found that, through his firm, Mr. Zandlo shifted profitable trades to certain accounts…
On May 1st, the Investment Adviser Association (IAA), sent a letter to the SEC’s new Chairman, Paul Atkins. The IAA is a nonprofit advocacy organization representing the interests of registered investment advisers. The IAA’s letter essentially acts as a call to action for the Commission’s new regime. In the letter,…
Regulators continue to emphasize the importance of registered investment advisers’ conflict-of-interest disclosures. The SEC recently settled a case with Transamerica Retirement Advisors, LLC (“Transamerica”) regarding account transfers with insufficient conflict of interest disclosure. While Transamerica settled without admitting or denying the allegations, the Commission’s findings are as follows: Transamerica, a…
Custody presents a compliance danger for investment advisers, including advisers to private funds. Three recent enforcement cases illustrate the importance of diligent compliance for fund advisers with custody of client assets. According to the Advisers Act, an investment adviser has custody of client assets if it holds, directly or indirectly,…
Two recent enforcement cases highlight the pitfalls of conversion from broker-dealer accounts to investment adviser accounts. In both cases, client accounts were converted from broker-dealer to advisory accounts, leading to a change in client fees. In both cases, the adviser was penalized for mismanaging the change in fee arrangements. The…
The SEC recently charged New York-based investment advisers Two Sigma Investments LP and Two Sigma Advisers LP (collectively, “Two Sigma”) with breaching their fiduciary duties for failing to reasonably address known vulnerabilities in their investment models. In its Order, the SEC also found compliance and supervisory failures related to those…
The SEC recently entered a cease-and-desist order against an SEC-registered investment adviser Federal Prep Advisors, Inc. (“Federal Prep”) and its principal regarding its rollover recommendations from Thrift Savings Plan (“TSP”) accounts to advisory Individual Retirement Accounts (“IRAs”). The SEC determined that Federal Prep did not adequately evaluate and disclose the…