enforcement action – Global Investment Law Watch

United States: Firms Fail to File 13Fs, Fines Follow

Sep 18 2024

By: C. Todd Gibson, Pablo J. Man, and Brian Doyle-Wenger

On 17 September 2024, the SEC announced settled charges against 11 institutional investment managers for failing to file Form 13F. In addition, two of the 11 firms also failed to file Forms 13H as large traders. The penalties ranged from US$175,000 to US$725,000, and in the aggregate exceeded US$3 million combined. However, two firms self-reported and paid no penalties and one firm self-reported Form 13H filing violations and paid no penalties on that portion of the settlement. Furthermore, all of the institutional investment managers made remedial filings covering several years (in one case over 50 such filings).

United States: More Marketing Missteps

Sep 10 2024

By: Pablo Man, Pamela Grossetti, Lance Dial and Jennifer Klass

On 9 September 2024, the Securities and Exchange Commission (SEC) announced settled charges against nine registered investment advisers for violations of Rule 206(4)-1 (the Marketing Rule). Unlike the prior settlements (which focused primarily on the use of hypothetical performance), these settlements focused on other elements of the Marketing Rule: (i) the prohibitions on statements of material fact that are untrue or that the adviser cannot substantiate; (ii) disclosures relating to testimonials and endorsements; and (iii) required disclosures for third-party ratings. Many of these violations were based on website disclosures. In total, nine advisers agreed to pay US$1,240,000 in combined civil penalties, ranging from US$60,000 to US$325,000.

United States: The MNPI Is Coming From Inside the House

Aug 28 2024

By: Pablo J. Man and Lance C. Dial

On 26 August 2024, the SEC settled charges against an SEC-registered adviser for policies and procedures failures related to the misuse of material nonpublic information (MNPI) concerning its trading of collateralized loan obligations (CLOs). The adviser paid a US$1.8 million penalty.

United States: CFTC Orders 11 Banks to Pay Over $710 Million for Illegal Use of Texting Apps

Oct 03 2022

By: Cheryl L. Isaac and Matthew J. Rogers

On September 27, 2022, the Commodity Futures Trading Commission (“CFTC”) announced the settlement of charges against the swap dealer (“SD”) and futures commission merchant (“FCM”) affiliates of 11 financial institutions totaling more than $710 million. The action, filed and settled on the same day and brought in tandem with a related Securities and Exchange Commission (“SEC”) action, charged the institutions with failing to meet certain CFTC recordkeeping requirements. Specifically, the Commission determined that the SDs / FCMs failed to stop their employees from communicating internally and externally using unapproved communication methods such as WhatsApp or Signal.

United States: CFTC Reaches Settlement with Oil and Natural Gas Advisor for Failure to Register as a SEF

Sep 29 2022

By: Cheryl L. Isaac and Spencer D. Warkentin

On September 26, 2022, amidst a flurry of other enforcement actions, the Commodity Futures Trading Commission (“CFTC”) announced the settlement of its administrative action against Asset Risk Management, LLC (“ARM”) in the amount of $200,000. The CFTC found that ARM operated an unregistered swap execution facility (“SEF”) for a period of 5 years, from September 2017 to the present.

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