On October 22, 2015, the Securities and Exchange Commission (“SEC”) released information on the enforcement cases they’ve brought during their 2015 fiscal year, which ended on September 30, 2015. The results as compared to 2014, include an additional 52 cases and $400 million in penalties and interest.
In the press release, the SEC provided a list of, and links to the cases brought, including those that fall into the category of “first-of-their-kind” actions, which involved:
- A private equity adviser for mis-allocating broken deal expenses;
- An underwriter for pricing related fraud in the primary market for municipal securities;
- A “Big Three” credit rating agency;
- Violations arising from a dark pool’s disclosure of order types to its subscribers;
- A Foreign Corrupt Practices Act of 1977 action against a financial institution;
- An admissions settlement with an auditing firm; and
- An SEC rule prohibiting the use of confidentiality agreements to impede whistle blower communication with the SEC.
According to SEC Chair Mary Jo White, “Vigorous and comprehensive enforcement protects investors and reassures them that our financial markets operate with integrity and transparency, and the Commission continues that enforcement approach by bringing innovative cases holding executives and companies accountable for their wrongdoing sending clear warnings to would be violators.” She further stated that, “The Enforcement Division’s leveraging of data, quantitative analytics and the expertise of our other divisions contributed significantly to this year’s very strong results.”
Areas that continue to result in enforcement actions for investment advisers and investment companies are lack of appropriate disclosures to clients and shareholders, insider trading activities, false and misleading performance advertising, and inaccurate valuations. While circumstances can vary, these are compliance areas that are universal to most all types and sizes of investment advisers and investment companies. To that end, Chief Compliance Officers should be cognizant of the cases brought in 2015 and determine if any action is necessary to enhance disclosures, help prevent insider trading, market accurate performance numbers, and ensure correct valuation assessments are made.
CCLS can help, as our consultants have extensive experience and are well versed in these areas. For information, please contact us at firstname.lastname@example.org or (619) 278-0020.