Investment Advisers

New Reg S-P Requirements for RIAs

October 30, 2025 | JP Dakak

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 compliance deadline of June 3, 2026.

Critically, Reg S-P now requires RIAs to notify clients in the event of certain data breaches. Under the amended rule, RIAs must notify clients of any event that could endanger their personal data, unless the RIA has determined, after reasonable investigation, that sensitive client information has not been, and is not reasonably likely to be, used for substantial harm or inconvenience. Such notice must be sent as soon as practicable, and no later than 30 days after learning of the breach, to any affected or potentially affected clients. If the RIA cannot identify which clients may be affected, the RIA must notify all of its clients. Substantively, any such notification must: Continue reading ›

SEC Punishes Firms for Altering Records

September 9, 2025 | JP Dakak

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. Continue reading ›

NASAA Proposes Changes to Advertising Rules

August 26, 2025 | JP Dakak

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 “more closely align” state rules with the SEC’s investment adviser advertising rules. In 2020, the SEC amended Rule 206(4)-1, its investment adviser marketing rule, to, among other things, allow testimonials, endorsements, third-party ratings, and performance advertising so long as certain restrictions and/or conditions are met. NASAA’s proposal mirrors the SEC marketing rule by permitting the following marketing activities: Continue reading ›

Minnesota RIA Charged with Cherry-Picking

July 24, 2025 | JP Dakak

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 from December 2020 through May 2022. Specifically, the SEC claimed the defendants were shifting profitable trades to accounts belonging to the firm, Mr. Zandlo, or people related to Mr. Zandlo (collectively, “Favored Accounts”). Continue reading ›

IAA Urges RIA Rule Changes in Letter to SEC Chairman

May 30, 2025 | JP Dakak

On May 1^st, 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, the IAA’s President and CEO, Karen Barr, applauds then-Acting Chairman Mark Uyeda’s pivot from the “one-size-fits-all” approach of former Chairman Gary Gensler.

Barr continued to outline eight major recommendations: Continue reading ›

Insufficient Conflict of Interest Disclosure Proves Costly

April 30, 2025 | JP Dakak

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: Continue reading ›

SEC Cites Three Advisers for Failure to Timely Audit Private Funds

March 11, 2025 | JP Dakak

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, client funds or securities, or if it has the authority to obtain possession of those assets. See Advisers Act Rule 206(4)-2(d)(2). Continue reading ›

Dangers of Converting from Broker-Dealer to Advisory Accounts

February 27, 2025 | JP Dakak

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 first case relates to One Oak Capital Management, LLC (“One Oak”), a registered investment adviser, and its dually registered investment adviser representative, Michael DeRosa. DeRosa, who was simultaneously employed at a separate broker-dealer, counseled several clients to convert their accounts from broker-dealer accounts and products to advisory accounts with One Oak. Continue reading ›

Investment Adviser Settles SEC Case on Model Security

February 13, 2025 | JP Dakak

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 violations, plus violation of the Commission’s whistleblower protections via Two Sigma’s employee separation agreements.

Two Sigma is a large quantitative-analytics-based hedge fund manager using computer-based algorithmic investment models when managing or advising client investments. The SEC claims that, by March 2019, multiple Two Sigma employees had informed senior management that various Two Sigma personnel could freely change variable inputs of their algorithmic models. These unchecked input modifications would alter the algorithm’s predictions and trades without notifying the firm, its representatives, or its clients. This autonomy of various personnel to rewrite the models’ data could materially impact investment decisions for Two Sigma clients. Continue reading ›

SEC Announces Enforcement Activity Under New Marketing Rule

September 19, 2024 | Charlie Jarrett

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 written about the implementation of the new Marketing Rule, the announcement of the corresponding examination sweep program, and the subsequent enforcement actions that have resulted. While the previous enforcement actions have largely centered around investment advisers who have failed to adopt policies and procedures designed to prevent violations of the new Marketing Rule, the recent enforcement actions give greater insight into the real-world application of the new Marketing Rule. Namely, the actions detail marketing violations due to the use of third-party ratings by the investment advisers.