On December 16, 2025, the SEC Division of Examinations released a Risk Alert containing observations regarding investment advisers’ compliance with Rule 206(4)-1 (the “Marketing Rule”). The Division provides risk alerts to inform and remind investment advisers and their stakeholders of advisers’ compliance requirements. Regarding third-party ratings in investment advisers’ advertisements,…
The compliance deadlines for the SEC’s amendments to Regulation S-P, adopted on May 15, 2024, are approaching. For investment advisers with $1.5 billion or more in assets under management, the compliance deadline is December 3, 2025. Advisers with fewer than $1.5 billion in AUM have six more months, with a…
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…
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 announced its annual Examination Priorities for the 2025 year. This annual release provides insight into the areas that the SEC plans to highlight when inspecting investment advisers, investment companies, broker-dealers, and other entities subject to examination by the SEC’s Division of Examinations. For investment advisers, the 2025…
Last week, the SEC announced a series of enforcement actions tied to its ongoing sweep of investment adviser compliance with the new Marketing Rule. In total, nine firms settled claims that they violated Advisers Act Rule 206(4)-1, the “new Marketing Rule,” resulting in $1,240,000 in civil penalties. We have previously…
In September 2023, the U.S. Securities and Exchange Commission (“SEC”) filed a complaint against Lufkin Advisors, LLC, a now de-registered Registered Investment Adviser, and its President, Chauncey Forbush Lufkin, III (collectively, “Defendants”) in the U.S. District Court for the Southern District of Florida. The SEC first alleged an ongoing fraudulent…