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Investment Advisers Under Heightened Scrutiny: Lessons from Recent SEC Enforcement Actions

Avoiding Conflicts of Interest, Non-Disclosure of Fees and Allocations, Insider Trading, and Other Regulatory Violations

Recording of a 90-minute premium CLE webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, March 29, 2017

Recorded event now available

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This CLE course will examine recent SEC actions against investment advisers, and the procedures and safeguards they should implement to prevent such claims. The panel will discuss conflicts of interest, non-disclosure of fees and expenses, misappropriation, misstatement of investment performance, and other violations which give rise to SEC actions and have resulted in the most significant financial penalties for investment advisers.

Description

Current SEC enforcement is highly focused on investment advisers, as they manage more than $67 trillion in assets for approximately 30 million clients. In the SEC’s most recent fiscal year, almost one in every five enforcement actions was against an investment adviser.

Advisers are subject to routine and for-cause examinations by the SEC examination staff, and due to enhanced reporting requirements, the SEC has access to voluminous data regarding their activities. The standards for establishing fiduciary liability are modest and don’t require intentional, knowing or reckless misconduct to prove a violation of the Investment Advisers Act.

SEC enforcement actions have been brought in connection with the violation of rules on virtually every aspect of investment advisers’ conduct, including conflicts of interest, reporting of fees and expenses, trade allocation practices (“cherry picking”), insider trading, valuation of securities, disclosures related to investment performance, misappropriation of investor funds, custody, and other violations. These actions can result in disgorgement of millions of dollars in fees and significant civil penalties for investment advisers.

Counsel can provide guidance for advisers to avoid these claims by adopting and implementing written policies and procedures reasonably designed to prevent violations of the Investment Advisers Act and SEC rules and annually reviewing the adequacy of policies and procedures.

Listen as our authoritative panel discusses the audit function of the SEC, significant actions brought by the SEC against investment advisers, and the violations most frequently cited. Our panel will also discuss a plan of action for preventing violations, including policies and procedures every investment adviser should have in place. Finally, the panel will discuss the future direction of the SEC and its effect on enforcement activities against investment advisers.

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Outline

  1. Recent SEC actions against investment advisers—frequency and severity
  2. Violations cited
  3. Investment adviser reporting obligations
  4. SEC audit capabilities
  5. Implementing policies and procedures to prevent violations

Benefits

The panel will review these and other key issues:

  • What kinds of violations have given rise to recent SEC enforcement actions?
  • What remedies are available to the SEC—and how severe are damages/penalties?
  • Why are investment advisers particularly vulnerable to potential SEC actions?
  • What steps can be taken to avoid the various violations that give rise to claims?

Faculty

Matthew A. Rossi
Matthew A. Rossi

Partner
Mayer Brown

Mr. Rossi's practice focuses on all aspects of securities regulatory enforcement defense with particular emphasis...  |  Read More

Gregory D. DiMeglio
Gregory D. DiMeglio

Chair, Securities Enforcement
Stradley Ronon Stevens & Young

Mr. DiMeglio represents public companies, investment companies, investment advisers, broker-dealers, boards of...  |  Read More

Blake L. Osborn
Blake L. Osborn

Orrick Herrington & Sutcliffe

Mr. Osborn is a member of the White Collar, Investigations, Securities Litigation and Compliance Group. He represents...  |  Read More

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