SEC Investigating Investment Advisers Whose Supervised Persons Received 12b-1 Fees on Advisory Accounts

If your investment adviser permitted its supervised persons to receive rule 12b-1 fees through an unaffiliated broker-dealer at any point in the last five years, you should start preparing for an examination by the SEC’s Office of Compliance Inspections and Examinations or an inquiry from its Division of Enforcement. (I recently covered the one ofContinue reading “SEC Investigating Investment Advisers Whose Supervised Persons Received 12b-1 Fees on Advisory Accounts”

SEC Settles With Investment Adviser Whose Associated Persons Received 12b-1 Fees from Unaffiliated Broker-Dealer

The Securities and Exchange Commission accepted an offer of settlement from Graham, Bordelon, Golson & Gilbert, Inc. (“Graham Bordelon”), an investment adviser with its headquarters is Monroe, Louisiana. This settled action is markedly different from the roughly hundred other actions involving share class selection practices to date. In this action, the SEC alleged that GrahamContinue reading “SEC Settles With Investment Adviser Whose Associated Persons Received 12b-1 Fees from Unaffiliated Broker-Dealer”

A Legal Analysis on Whether Form U4 is Subject to Ongoing Amendments for SEC Registered Investment Advisers

Recently, I was posed with the question of whether an investment adviser registered with the U.S. Securities and Exchange Commission has an ongoing obligation to update its supervised persons’ Form U4s. I always assumed the answer was yes, but I recently dug into this assumption from a legal perspective. After conducting a bit more legalContinue reading “A Legal Analysis on Whether Form U4 is Subject to Ongoing Amendments for SEC Registered Investment Advisers”

Strategies for Breaking Away While Subject to a Non-Solicitation Agreement

Financial professionals that have entered into an employment agreement or some other form of contract with their employer that contains an agreement not to solicit clients upon their departure are in an extremely difficult place. How do you get out of an employment situation that you no longer want to be in without taking unnecessaryContinue reading “Strategies for Breaking Away While Subject to a Non-Solicitation Agreement”

Non-Broker Protocol Transitions – How to Prepare for and Avoid Litigation

The Broker Protocol simplified employment transitions by financial professionals over the last decade and a half. (I use the term “employer” and “employment” loosely, and it is intended to capture independent contractor situations too.) The Broker Protocol made it relatively simple to transition from one broker-dealer or financial institution to another without fear of litigationContinue reading “Non-Broker Protocol Transitions – How to Prepare for and Avoid Litigation”

Proposed Changes to FINRA’s MFA Requirement on Behalf of Law Firms and Compliance Consultants

This is a gentle reminder that while FINRA only regulates its broker-dealer members, it hosts the Investment Adviser Registration Depository (“IARD”) and Central Registration Depository (“CRD”). The IARD and CRD are two systems used by investment advisers registered with states and the SEC and exempt-reporting advisers. FINRA has adopted a new multi-factor authentication system (“MFA”)Continue reading “Proposed Changes to FINRA’s MFA Requirement on Behalf of Law Firms and Compliance Consultants”

SEC OCIE Issues Risk Alert to Private Fund Advisers

On Tuesday, June 23, 2020, the Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert aimed at registered investment advisers that manage private equity funds and hedge funds. The Risk Alert can be found here. The Risk Alert identified three primary areas for deficiencies issued by OCIE to these advisers as a resultContinue reading “SEC OCIE Issues Risk Alert to Private Fund Advisers”

SEC FOIA Process Steps Into Century–Will it Stay Post-COVID?

The Securities and Exchange Commission recently modified its process for requesting confidential treatment under Rule 83. As a background, Rule 83 provides a procedure for investment advisers to request that information submitted during an examination, inspection, or investigation be withheld when requested under the Freedom of Information Act. The recent guidance now permits persons toContinue reading “SEC FOIA Process Steps Into Century–Will it Stay Post-COVID?”

The Lawfulness and Morality of Applying for PPP Loans and Not Disclosing Them

Background The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020, and introduced the Paycheck Protection Program (the “PPP”) with the goal of preventing job loss and small businesses failure due to losses caused by the COVID-19 pandemic. To accomplish the policy behind the program, qualifying businessesContinue reading “The Lawfulness and Morality of Applying for PPP Loans and Not Disclosing Them”

SBA Releases New FAQ on “Necessity” Standard and Good Faith Obligation

On May 13, 2020, the SBA released new guidance in consultation with the Department of the Treasury. The guidance is set forth below: 46. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request? Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrentContinue reading “SBA Releases New FAQ on “Necessity” Standard and Good Faith Obligation”