Pub Date : 2019-07-01DOI: 10.1108/JOIC-02-2019-0014
Alec Koch, R. Ryan, Laura K. Bennett
Purpose To provide analysis on several SEC enforcement actions of interest to broker-dealers and investment advisers. Design/methodology/approach The article is organized chronologically based on the dates of the SEC enforcement actions discussed. Findings The SEC enforcement actions discussed in the article demonstrate that broker-dealers and investment advisers must maintain and enforce compliance and supervision policies and procedures reasonably designed to detect and prevent violations of the securities laws. When firm personnel commit violations (either intentionally or inadvertently), the SEC will evaluate whether firms could have been more effective in detecting and preventing those violations.Some of these cases also serve to remind firms that the SEC will often take enforcement action even when there is no evidence of customer harm. Originality/value Practical guidance from experienced securities lawyers that consolidates and analyzes several recent SEC enforcement actions.
{"title":"2018 SEC enforcement actions reinforce the importance of effective supervision, policies, and procedures for broker-dealers and investment advisers","authors":"Alec Koch, R. Ryan, Laura K. Bennett","doi":"10.1108/JOIC-02-2019-0014","DOIUrl":"https://doi.org/10.1108/JOIC-02-2019-0014","url":null,"abstract":"\u0000Purpose\u0000To provide analysis on several SEC enforcement actions of interest to broker-dealers and investment advisers.\u0000\u0000\u0000Design/methodology/approach\u0000The article is organized chronologically based on the dates of the SEC enforcement actions discussed.\u0000\u0000\u0000Findings\u0000The SEC enforcement actions discussed in the article demonstrate that broker-dealers and investment advisers must maintain and enforce compliance and supervision policies and procedures reasonably designed to detect and prevent violations of the securities laws. When firm personnel commit violations (either intentionally or inadvertently), the SEC will evaluate whether firms could have been more effective in detecting and preventing those violations.Some of these cases also serve to remind firms that the SEC will often take enforcement action even when there is no evidence of customer harm.\u0000\u0000\u0000Originality/value\u0000Practical guidance from experienced securities lawyers that consolidates and analyzes several recent SEC enforcement actions.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127959628","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-07-01DOI: 10.1108/JOIC-02-2019-0015
Sam Maxson, Stuart Davis, Robert L. Moulton
Purpose To analyse the final report of the UK Cryptoassets Taskforce published in October 2018 and discuss the UK’s policy and regulatory approach to crypto-assets and distributed ledger technology in financial services. Design/methodology/approach This article considers some of the key aspects of the final report of the UK Cryptoassets Taskforce and provides a summary of the next steps the UK authorities have committed to taking in relation to regulation of crypto-assets in the UK. Findings The approach to regulation of crypto-assets in the UK is evolving and the relevant UK authorities are continuing to improve their understanding of crypto-assets in order to assess the appropriate type and level of regulation that should apply to them. Whilst risks relating to consumer detriment and anti-money laundering have been identified as needing to be addressed as a matter of priority, the UK authorities appear to be taking a measured approach to regulation of crypto-assets. They also remain supportive of the adoption of distributed ledger technology in financial services, whilst noting some potential challenges to scalability. Originality/value This article contains valuable information about current policy direction and regulatory thinking in the UK in relation to crypto-assets, and analysis from leading FinTech lawyers.
{"title":"UK Cryptoassets Taskforce publishes its final report","authors":"Sam Maxson, Stuart Davis, Robert L. Moulton","doi":"10.1108/JOIC-02-2019-0015","DOIUrl":"https://doi.org/10.1108/JOIC-02-2019-0015","url":null,"abstract":"\u0000Purpose\u0000To analyse the final report of the UK Cryptoassets Taskforce published in October 2018 and discuss the UK’s policy and regulatory approach to crypto-assets and distributed ledger technology in financial services.\u0000\u0000\u0000Design/methodology/approach\u0000This article considers some of the key aspects of the final report of the UK Cryptoassets Taskforce and provides a summary of the next steps the UK authorities have committed to taking in relation to regulation of crypto-assets in the UK.\u0000\u0000\u0000Findings\u0000The approach to regulation of crypto-assets in the UK is evolving and the relevant UK authorities are continuing to improve their understanding of crypto-assets in order to assess the appropriate type and level of regulation that should apply to them. Whilst risks relating to consumer detriment and anti-money laundering have been identified as needing to be addressed as a matter of priority, the UK authorities appear to be taking a measured approach to regulation of crypto-assets. They also remain supportive of the adoption of distributed ledger technology in financial services, whilst noting some potential challenges to scalability.\u0000\u0000\u0000Originality/value\u0000This article contains valuable information about current policy direction and regulatory thinking in the UK in relation to crypto-assets, and analysis from leading FinTech lawyers.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"64 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114337306","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-07-01DOI: 10.1108/JOIC-04-2019-0019
Katherine J. Kirkpatrick, C. Savage, R. Johnston, Matthew Hanson
Purpose To understand and analyze sanctions evasion and enforcement via virtual currencies. Design/methodology/approach Discusses various jurisdictions’ attempts to further the use of virtual currency to facilitate and maximize access to international funds; analyzes the aspects that make virtual currency uniquely suited to evade sanctions; suggests best practices for industry participants to be sure to account for the differences in crypto asset structure and related risks. Findings The US Treasury Department’s Office of Foreign Assets Control (OFAC) has explicitly stated that despite virtual currency’s anonymity, industry participants are still responsible for policing and enforcing client compliance. Although sanctioned jurisdictions are thinking creatively about ways around SWIFT, the use of virtual currency to skirt sanctions presents certain challenges. Practical implications Virtual currency industry participants should understand OFAC’s specific guidance regarding compliance obligations in the cryptocurrency space, and should implement best practices and conservative measures to avoid unknowingly running afoul of sanctions laws. Originality/value Expert analysis and guidance from experienced investigations and sanctions lawyers.
{"title":"Virtual currency in sanctioned jurisdictions: stepping outside of SWIFT","authors":"Katherine J. Kirkpatrick, C. Savage, R. Johnston, Matthew Hanson","doi":"10.1108/JOIC-04-2019-0019","DOIUrl":"https://doi.org/10.1108/JOIC-04-2019-0019","url":null,"abstract":"\u0000Purpose\u0000To understand and analyze sanctions evasion and enforcement via virtual currencies.\u0000\u0000\u0000Design/methodology/approach\u0000Discusses various jurisdictions’ attempts to further the use of virtual currency to facilitate and maximize access to international funds; analyzes the aspects that make virtual currency uniquely suited to evade sanctions; suggests best practices for industry participants to be sure to account for the differences in crypto asset structure and related risks.\u0000\u0000\u0000Findings\u0000The US Treasury Department’s Office of Foreign Assets Control (OFAC) has explicitly stated that despite virtual currency’s anonymity, industry participants are still responsible for policing and enforcing client compliance. Although sanctioned jurisdictions are thinking creatively about ways around SWIFT, the use of virtual currency to skirt sanctions presents certain challenges.\u0000\u0000\u0000Practical implications\u0000Virtual currency industry participants should understand OFAC’s specific guidance regarding compliance obligations in the cryptocurrency space, and should implement best practices and conservative measures to avoid unknowingly running afoul of sanctions laws.\u0000\u0000\u0000Originality/value\u0000Expert analysis and guidance from experienced investigations and sanctions lawyers.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"95 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132812895","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-07-01DOI: 10.1108/JOIC-04-2019-0023
J. Nowak, Thomas A. Zaccaro, Katherine K. Solomon
Purpose The purpose of this article is to highlight a recent settlement by the United States Securities and Exchange Commission (the “SEC”) in which it alleged that a regulated entity failed to supervise a representative principally because the entity did not establish clear guidance as to how its personnel should investigate red flags of a representative’s potential misconduct (e.g., how to follow up on the red flags and define the scope of any inquiry). Design/methodology/approach This article provides an overview of failure-to-supervise liability for broker-dealers and investment advisers, and highlights key takeaways from the SEC’s recent enforcement resolution that may be applied in establishing compliance procedures relating to internal investigations going forward. Findings The article concludes that the SEC appears to expect regulated entities to implement procedures guiding employees on “how to investigate” suspicious activity. Companies, however, should define such procedures in general terms to allow for flexibility in investigations, which can present unique or unforeseen situations. Internal procedures must also account for and preserve attorney-client privilege and attorney work product protections. Originality/value This article provides expert analysis and practical guidance from experienced lawyers in the Investigations and White Collar Defense and Securities Enforcement practices
{"title":"A failure to supervise: the SEC casts a shadow over internal investigations","authors":"J. Nowak, Thomas A. Zaccaro, Katherine K. Solomon","doi":"10.1108/JOIC-04-2019-0023","DOIUrl":"https://doi.org/10.1108/JOIC-04-2019-0023","url":null,"abstract":"\u0000Purpose\u0000The purpose of this article is to highlight a recent settlement by the United States Securities and Exchange Commission (the “SEC”) in which it alleged that a regulated entity failed to supervise a representative principally because the entity did not establish clear guidance as to how its personnel should investigate red flags of a representative’s potential misconduct (e.g., how to follow up on the red flags and define the scope of any inquiry).\u0000\u0000\u0000Design/methodology/approach\u0000This article provides an overview of failure-to-supervise liability for broker-dealers and investment advisers, and highlights key takeaways from the SEC’s recent enforcement resolution that may be applied in establishing compliance procedures relating to internal investigations going forward.\u0000\u0000\u0000Findings\u0000The article concludes that the SEC appears to expect regulated entities to implement procedures guiding employees on “how to investigate” suspicious activity. Companies, however, should define such procedures in general terms to allow for flexibility in investigations, which can present unique or unforeseen situations. Internal procedures must also account for and preserve attorney-client privilege and attorney work product protections.\u0000\u0000\u0000Originality/value\u0000This article provides expert analysis and practical guidance from experienced lawyers in the Investigations and White Collar Defense and Securities Enforcement practices\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130059420","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-24DOI: 10.1108/JOIC-04-2019-0020
J. Hoffman, Jude Dworaczyk
Purpose To explain recent amendments by the US Securities and Exchange Commission (the SEC) to Sections 312.03(b) relating to issuances of securities to substantial stockholders (the Substantial Stockholder Issuance Rule) and 312.03(c) (the 20 Per cent Rule) of the New York Stock Exchange’s (the NYSE) Listed Company Manual to change the definition of “market value” for purposes of the 20 Per cent Rule and eliminate the requirement for shareholder approval of certain private issuances at a price less than book value but greater than market value. Design/methodology/approach This article provides background on the purpose and policy behind the Substantial Stockholder Issuance Rule and the 20 Per cent Rule and summarizes the provisions of each rule, both before and after the recent SEC amendments thereto. This article then highlights the most important changes to the Substantial Stockholder Issuance Rule and the 20 Per cent Rule and explains the implications thereof for NYSE-listed issuers. Findings The amended Substantial Stockholder Issuance Rule and the 20 Per cent Rule provide NYSE-listed issuers greater flexibility in structuring transactions involving private placements of equity and will likely reduce the number of such transactions requiring a shareholder vote. Originality/value Practical guidance from experienced corporate finance and capital markets lawyers.
{"title":"SEC approves amendments to the NYSE’s substantial stockholder issuance rule and 20 per cent rule for shareholder approval of certain private offerings","authors":"J. Hoffman, Jude Dworaczyk","doi":"10.1108/JOIC-04-2019-0020","DOIUrl":"https://doi.org/10.1108/JOIC-04-2019-0020","url":null,"abstract":"\u0000Purpose\u0000To explain recent amendments by the US Securities and Exchange Commission (the SEC) to Sections 312.03(b) relating to issuances of securities to substantial stockholders (the Substantial Stockholder Issuance Rule) and 312.03(c) (the 20 Per cent Rule) of the New York Stock Exchange’s (the NYSE) Listed Company Manual to change the definition of “market value” for purposes of the 20 Per cent Rule and eliminate the requirement for shareholder approval of certain private issuances at a price less than book value but greater than market value.\u0000\u0000\u0000Design/methodology/approach\u0000This article provides background on the purpose and policy behind the Substantial Stockholder Issuance Rule and the 20 Per cent Rule and summarizes the provisions of each rule, both before and after the recent SEC amendments thereto. This article then highlights the most important changes to the Substantial Stockholder Issuance Rule and the 20 Per cent Rule and explains the implications thereof for NYSE-listed issuers.\u0000\u0000\u0000Findings\u0000The amended Substantial Stockholder Issuance Rule and the 20 Per cent Rule provide NYSE-listed issuers greater flexibility in structuring transactions involving private placements of equity and will likely reduce the number of such transactions requiring a shareholder vote.\u0000\u0000\u0000Originality/value\u0000Practical guidance from experienced corporate finance and capital markets lawyers.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"152 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127029590","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-19DOI: 10.1108/JOIC-04-2019-0021
Susan O Hurd, M. Gworek, Evan Glustrom
Purpose To analyze the impact of the Supreme Court’s decision in Lorenzo v. SEC. Design/methodology/approach Discusses the lead up to the decision, the arguments made by both sides, and the opinion of the Court, and makes predictions about the likely impact of the decision. Findings The holding is unlikely to have a significant impact on private securities litigation as shareholders, unlike the SEC, are required to prove reliance and, under the Lorenzo fact pattern, reliance cannot be shown. Originality/value Expert analysis and guidance from experienced securities litigation counsel.
目的分析最高法院在Lorenzo v. sec一案中判决的影响。设计/方法/途径讨论判决的原因、双方的论点和法院的意见，并对判决可能产生的影响做出预测。调查结果:持股不太可能对私人证券诉讼产生重大影响，因为与美国证券交易委员会不同，股东需要证明其可靠性，而在洛伦佐事实模式下，无法证明其可靠性。原创性/价值来自经验丰富的证券诉讼律师的专家分析和指导。
{"title":"Lorenzo v. SEC: the supreme court rules on scheme liability under the federal securities laws","authors":"Susan O Hurd, M. Gworek, Evan Glustrom","doi":"10.1108/JOIC-04-2019-0021","DOIUrl":"https://doi.org/10.1108/JOIC-04-2019-0021","url":null,"abstract":"\u0000Purpose\u0000To analyze the impact of the Supreme Court’s decision in Lorenzo v. SEC.\u0000\u0000\u0000Design/methodology/approach\u0000Discusses the lead up to the decision, the arguments made by both sides, and the opinion of the Court, and makes predictions about the likely impact of the decision.\u0000\u0000\u0000Findings\u0000The holding is unlikely to have a significant impact on private securities litigation as shareholders, unlike the SEC, are required to prove reliance and, under the Lorenzo fact pattern, reliance cannot be shown.\u0000\u0000\u0000Originality/value\u0000Expert analysis and guidance from experienced securities litigation counsel.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128673949","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-05-07DOI: 10.1108/JOIC-12-2018-0055
D. Martin, D. Engvall, K. Burke, Gerald Hodgkins, Matthew C. Franker, Reid S. Hooper
Purpose To summarize and explain the US Securities and Exchange Commission’s (Commission) recent report of investigation cautioning public companies to consider cyber-related threats when designing and implementing internal accounting controls. Design/methodology/approach Explains that the Commission’s report arose out of a Commission enforcement investigation into the internal accounting controls of nine unidentified public companies that were victims of email scams, explains that the Commission issued the report to emphasize that cybersecurity remains a high priority for the Commission and the report should serve as a reminder that all public companies need to consider cyber-related threats when devising and maintaining internal accounting controls and provides practical considerations for public companies to consider in light of the Commission’s report. Findings Public companies should assume that the Commission is actively monitoring all areas related to cybersecurity, including corporate disclosures of cyber-related incidents and also whether companies have established policies, procedures, and internal controls in place to ensure cyber-related incidents are prevented. Given that assumption, public companies should take prompt steps to assess and, if appropriate, improve internal accounting controls, disclosure controls, and cyber-related policies and procedures to address the risk of cyber-related incidents. Originality/value Practical guidance from experienced securities lawyers.
{"title":"US SEC report calls for better internal accounting controls for cyber-related threats","authors":"D. Martin, D. Engvall, K. Burke, Gerald Hodgkins, Matthew C. Franker, Reid S. Hooper","doi":"10.1108/JOIC-12-2018-0055","DOIUrl":"https://doi.org/10.1108/JOIC-12-2018-0055","url":null,"abstract":"\u0000Purpose\u0000To summarize and explain the US Securities and Exchange Commission’s (Commission) recent report of investigation cautioning public companies to consider cyber-related threats when designing and implementing internal accounting controls.\u0000\u0000\u0000Design/methodology/approach\u0000Explains that the Commission’s report arose out of a Commission enforcement investigation into the internal accounting controls of nine unidentified public companies that were victims of email scams, explains that the Commission issued the report to emphasize that cybersecurity remains a high priority for the Commission and the report should serve as a reminder that all public companies need to consider cyber-related threats when devising and maintaining internal accounting controls and provides practical considerations for public companies to consider in light of the Commission’s report.\u0000\u0000\u0000Findings\u0000Public companies should assume that the Commission is actively monitoring all areas related to cybersecurity, including corporate disclosures of cyber-related incidents and also whether companies have established policies, procedures, and internal controls in place to ensure cyber-related incidents are prevented. Given that assumption, public companies should take prompt steps to assess and, if appropriate, improve internal accounting controls, disclosure controls, and cyber-related policies and procedures to address the risk of cyber-related incidents.\u0000\u0000\u0000Originality/value\u0000Practical guidance from experienced securities lawyers.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"502 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116198018","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-05-07DOI: 10.1108/JOIC-01-2019-0004
Wendy E. Cohen, Richard D. Marshall, Allison C. Yacker, L. Zinman
Purpose To explain actions the US Securities and Exchange Commission (SEC) brought on August 27, 2018, against a group of affiliated investment advisers and broker-dealers for what the SEC considered misleading and insufficient representations and disclosures, insufficient compliance policies and procedures, and insufficient research and oversight concerning the use of faulty quantitative models to manage certain client accounts. Design/methodology/approach Explains the SEC’s findings concerning the advisers’ and broker-dealers’ failure to confirm that certain models worked as intended, to disclose the risks associated with the use of those models, to disclose the role of a research analyst in developing the models, to disclose the use of volatility overlays along with the associated risks, to determine whether a fund’s holdings were sufficient to support a consistent dividend payout without a return of capital, and to take sufficient steps to confirm the advertised performance of another investment manager whose products they were marketing. Provides insight into the SEC’s position and offers key takeaways. Findings These cases are significant for advisers who use quantitative models to implement their investment strategies in the management of client accounts and signal the SEC’s continued focus on investment advisers’ compliance with disclosure obligations to discretionary account investors. Practical implications Each manager should consider its own facts and circumstances, and should consult with counsel, in assessing how and to what extent to incorporate the SEC’s conclusions in crafting disclosure and other communications with investors on matters such as adequate representations, testing and validation of models, disclosure of errors, and verifying performance claims. Originality/value Practical guidance from experienced securities lawyers.
{"title":"SEC sues asset managers for using untested, error-filled quantitative investment models","authors":"Wendy E. Cohen, Richard D. Marshall, Allison C. Yacker, L. Zinman","doi":"10.1108/JOIC-01-2019-0004","DOIUrl":"https://doi.org/10.1108/JOIC-01-2019-0004","url":null,"abstract":"\u0000Purpose\u0000To explain actions the US Securities and Exchange Commission (SEC) brought on August 27, 2018, against a group of affiliated investment advisers and broker-dealers for what the SEC considered misleading and insufficient representations and disclosures, insufficient compliance policies and procedures, and insufficient research and oversight concerning the use of faulty quantitative models to manage certain client accounts.\u0000\u0000\u0000Design/methodology/approach\u0000Explains the SEC’s findings concerning the advisers’ and broker-dealers’ failure to confirm that certain models worked as intended, to disclose the risks associated with the use of those models, to disclose the role of a research analyst in developing the models, to disclose the use of volatility overlays along with the associated risks, to determine whether a fund’s holdings were sufficient to support a consistent dividend payout without a return of capital, and to take sufficient steps to confirm the advertised performance of another investment manager whose products they were marketing. Provides insight into the SEC’s position and offers key takeaways.\u0000\u0000\u0000Findings\u0000These cases are significant for advisers who use quantitative models to implement their investment strategies in the management of client accounts and signal the SEC’s continued focus on investment advisers’ compliance with disclosure obligations to discretionary account investors.\u0000\u0000\u0000Practical implications\u0000Each manager should consider its own facts and circumstances, and should consult with counsel, in assessing how and to what extent to incorporate the SEC’s conclusions in crafting disclosure and other communications with investors on matters such as adequate representations, testing and validation of models, disclosure of errors, and verifying performance claims.\u0000\u0000\u0000Originality/value\u0000Practical guidance from experienced securities lawyers.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"108 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122051006","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-05-07DOI: 10.1108/JOIC-01-2019-0006
J. J. Sikora, Stephen P. Wink, Douglas K. Yatter, Naim Culhaci
Purpose To analyze the settled order of the US Securities and Exchange Commission (SEC) against TokenLot LLC (TokenLot), which was the SEC’s first action charging a seller of digital tokens as an unregistered broker-dealer. Design/methodology/approach Analyzes the SEC’s order within the context of other recent actions by the SEC on cryptocurrencies and digital tokens and discusses future implications of the order in this area. Findings The SEC’s order against TokenLot as an unregistered broker-dealer was a logical next step in its enforcement activity in the cryptocurrency and digital token space.The order demonstrates that the SEC expects firms in the cryptocurrency space to use the well-established constructs of federal securities laws to evaluate their business activities to ensure those activities are legally compliant. Originality/value Practical guidance from experienced securities and financial services lawyers analyzing recent developments in a nascent area of SEC enforcement.
{"title":"SEC charges “ICO Superstore” as unregistered broker-dealer","authors":"J. J. Sikora, Stephen P. Wink, Douglas K. Yatter, Naim Culhaci","doi":"10.1108/JOIC-01-2019-0006","DOIUrl":"https://doi.org/10.1108/JOIC-01-2019-0006","url":null,"abstract":"\u0000Purpose\u0000To analyze the settled order of the US Securities and Exchange Commission (SEC) against TokenLot LLC (TokenLot), which was the SEC’s first action charging a seller of digital tokens as an unregistered broker-dealer.\u0000\u0000\u0000Design/methodology/approach\u0000Analyzes the SEC’s order within the context of other recent actions by the SEC on cryptocurrencies and digital tokens and discusses future implications of the order in this area.\u0000\u0000\u0000Findings\u0000The SEC’s order against TokenLot as an unregistered broker-dealer was a logical next step in its enforcement activity in the cryptocurrency and digital token space.The order demonstrates that the SEC expects firms in the cryptocurrency space to use the well-established constructs of federal securities laws to evaluate their business activities to ensure those activities are legally compliant.\u0000\u0000\u0000Originality/value\u0000Practical guidance from experienced securities and financial services lawyers analyzing recent developments in a nascent area of SEC enforcement.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"23 10","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133106939","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-05-07DOI: 10.1108/JOIC-01-2019-0005
Jennifer Park, A. Mainoo
Purpose To explain a recent enforcement action by the US Securities and Exchange Commission (SEC) highlighting risk factors for Foreign Corrupt Practices Act (FCPA) violations. Design/methodology/approach Summarizes the basis of the SEC’s enforcement action against Sanofi for violating the FCPA’s books and records and internal controls provisions, reviews the terms of the SEC’s resolution with Sanofi, explains Sanofi’s remedial efforts and cooperation with the SEC’s investigation, and discusses factors contributing to corruption risks in the healthcare industry. Findings The SEC’s enforcement action against Sanofi, and other recent enforcement actions, underscore the importance of comprehensive anti-corruption compliance programs and strong internal controls across large multinationals and their subsidiaries. Practical implications Companies operating in high-risk industries and markets should regularly assess and address corruption risks. Originality/value Practical guidance from experienced enforcement lawyers.
{"title":"Sanofi settles FCPA charges with SEC for $25.2 million","authors":"Jennifer Park, A. Mainoo","doi":"10.1108/JOIC-01-2019-0005","DOIUrl":"https://doi.org/10.1108/JOIC-01-2019-0005","url":null,"abstract":"\u0000Purpose\u0000To explain a recent enforcement action by the US Securities and Exchange Commission (SEC) highlighting risk factors for Foreign Corrupt Practices Act (FCPA) violations.\u0000\u0000\u0000Design/methodology/approach\u0000Summarizes the basis of the SEC’s enforcement action against Sanofi for violating the FCPA’s books and records and internal controls provisions, reviews the terms of the SEC’s resolution with Sanofi, explains Sanofi’s remedial efforts and cooperation with the SEC’s investigation, and discusses factors contributing to corruption risks in the healthcare industry.\u0000\u0000\u0000Findings\u0000The SEC’s enforcement action against Sanofi, and other recent enforcement actions, underscore the importance of comprehensive anti-corruption compliance programs and strong internal controls across large multinationals and their subsidiaries.\u0000\u0000\u0000Practical implications\u0000Companies operating in high-risk industries and markets should regularly assess and address corruption risks.\u0000\u0000\u0000Originality/value\u0000Practical guidance from experienced enforcement lawyers.\u0000","PeriodicalId":399186,"journal":{"name":"Journal of Investment Compliance","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121729618","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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