In Wake of Panama Papers Scandal Obama Calls for Stricter Bank Regulations, Tax Rules

In a news conference today President Obama addressed rules and proposed regulations announced Thursday intended to help the U.S. fight tax evasion and other crimes connected to anonymous offshore companies and accounts.  The announcements come after a month of intense review by the administration following the first release of the so-called Panama Papers, millions of documents stolen or leaked from Panamanian law firm Mossack, Fonseca.  The papers have revealed a who’s who of international politicians, business leaders, sports figures and celebrities involved with financial transactions accomplished through anonymous shell corporations.

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The Benefit of the Doubt: SEC Scores an Insider Trading Win Despite Newman’s Personal Benefit Requirement

On February 29, 2016, in Securities and Exchange Commission v. Payton et al, a jury found two stockbrokers liable for trading on confidential tips about an acquisition being made by IBM despite the ruling made by the Second Circuit Court of Appeals in United States v. Newman[1] in December 2014. Continue Reading

SEC Releases 2016 Examination Priorities

On January 11, 2016 the Office of Compliance Inspections and Examinations (the “OCIE”) for the Securities and Exchange Commission (the “SEC”) announced its key areas of focus with respect to examinations in 2016. Like last year, the OCIE’s priorities are organized into three categories; (i) risks facing retail investors, (ii) assessing issues related to market-wide risks and (iii) new and evolving technology that will allow the OCIE to evaluate larger amounts of data to identify registrants who are participating in illegal activity. Continue Reading

SEC Issues a Risk Alert on the Current State of Outside Compliance Consultants

On November 9, 2015, the SEC’s Office of Compliance Inspections and Examinations issued a Risk Alert, noting that some of the outside CCOs that were examined were not sufficiently competent, knowledgeable of the business of the company or the federal securities laws or empowered with full responsibility, resources and authority to develop and enforce appropriate policies and procedures for the company. Observations of the SEC’s staff include: Continue Reading

SEC Charges Investment Adviser for Failure to Disclose Acceleration of Monitoring Fees and Discounts on Legal Fees

On October 7, 2015, the Securities and Exchange Commission (the “SEC”) announced that three private equity fund advisers with The Blackstone Group (“Blackstone”) have agreed to pay approximately $39 million to settle charges that the advisers failed to fully inform investors about the benefits those advisers obtained from (i) accelerated monitoring fees and (ii) discounts on legal fees, and thereby breached their fiduciary duty. Continue Reading

SEC Co-Chief of Division of Enforcement’s Asset Management Unit Identifies 2015 Exam Priorities for Hedge and Private Equity Funds

On November 18, 2014, Julie M. Riewe, Co-Chief of the Division of Enforcement’s Asset Management Unit of the Securities and Exchange Commission (the “SEC”), spoke at a Practicing Law Institute seminar and identified 2015 SEC examination priorities for investment managers of private funds.  Ms. Riewe identified three themes on which the SEC will focus in its examinations of hedge and private equity funds: (i) conflicts of interest, (ii) valuation and (iii) compliance and controls.  She discussed how these thematic issues related to both hedge funds and private equity funds.

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SEC Releases 2015 Examination Priorities

On January 13, 2015, the Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (the “SEC”) released its 2015 examination priorities.  The SEC identified three thematic issues:  (i) matters relating to retail investors and investors saving for retirement, (ii) issues related to market-wide risks and (iii) analysis of data to identify and examine registrants that may be engaged in illegal activity.

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Second Circuit Affirms Tippee Liability

On December 10, 2014, the Second Circuit Court of Appeals rendered a decision[1] regarding an insider trading case that affirmed the elements to prove tippee liability.  The Second Circuit was reviewing a district court’s conviction of Todd Newman, a portfolio manager at Diamondback Capital Management, LLC, and Anthony Chiasson, a portfolio manager at Level Global Investors, L.P., of insider trading based on tippee liability.  The Second Circuit found that the jury instruction given by the district court was erroneous because the jury instruction failed to state that the government must prove beyond a reasonable that the tipeee knew that an insider disclosed confidential information and that such insider did so in exchange for a personal benefit.

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Staying Above The Political Fray – The RIA Political Contribution Rule

It is entirely understandable if after the recent hotly contested “mid-term” elections the general public would like to put political campaigns behind them– at least for the few months before the hype around the 2016 U.S. Presidential elections kicks into gear.  For many folks in the U.S. financial services industry, however, political campaigns have to be kept in mind all year round, every year.  This is thanks, foremost, to the U.S. Securities and Exchange Commission’s “pay-to-play” rules promulgated under the Investment Advisers Act of 1940 (the “Advisers Act”).  The so-called “pay-to-play” rules can be found in Advisers Act Rule 206(4)-5 (the “Political Contribution Rules”) (which can be found on page 194 of this PDF).  The Political Contribution Rule was first proposed in 2009, in the wake of the scintillating tales arising out of the unquestioned abuse of position by certain politicians at the pension plans for New York, California, Illinois and New Mexico, to name a few.  The Political Contribution Rule was adopted in 2010 (and went effective in 2011) and has found its place into the compliance programs of RIAs across the US.

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