On January 26, Reuters reported SEC probes into registered investment advisers and their compliance with the custody rule for digital assets. Investment advisers should be ready to respond to any SEC inquiry and take the opportunity to review their own processes and disclosures such as, among other things:
Action Implicates Attorney-Client Privilege and Other Concerns
Factual Background
On January 10, 2023, the SEC filed a subpoena enforcement action against Covington, a large law firm that was victimized by the so-called Hafnium cyberattack by Chinese state actors.[1] Hafnium reportedly was engaged in espionage to determine priorities of the incoming Biden administration in November 2020. The SEC seeks names of Covington clients whose information was accessed by the attackers. Covington has refused to supply the name of its clients, arguing that such information is protected by the attorney-client privilege and work-product doctrine, and that compliance with the subpoena would be unduly burdensome.
A very effective panel discussion on “Leadership Matters: Meaningful, Measured Impact in Diversity and Inclusion” took place September 23, 2020 during the SIFMA C&L Virtual Forum. Elaine Mandelbaum, General Counsel of Interactive Brokers and the current SIFMA C&L Society president moderated with panelists Christopher Lewis, General Counsel, Edward Jones; Robert Marchman, Senior Policy Advisor on Diversity and Inclusion, U.S. Securities and Exchange Commission; and Grace Speights, chair of Morgan Lewis’ Labor and Employment practice. Too many highlights to cover fairly, but these points that resonated with me.
Continue Reading Achieving Diversity and Inclusion within the Securities and Financial Management Industry and its Legal Partners
By Toby M. Galloway, Matthias Kleinsasser, Joe Wielebinski
In sports, it is often said that “winning cures everything.” The same concept applies to uncovering fraud. When the economy is strong and most investors are making money, there is little incentive to ask difficult questions about a company’s performance. Once the economy craters, however, investors begin demanding answers and harsh truths are often revealed. As Warren Buffett has said, “only when the tide goes out do you discover who’s been swimming naked.”
Continue Reading Fraud in the Time of Covid-19
On December 18, 2019, the SEC proposed to amend its definition of “Accredited Investor” with hopes to expand access to private capital markets to a wider range of investors.[1] The proposed changes create two new categories of natural persons who may be considered “accredited investors” and add to the categories of institutional investors who qualify. According to the SEC’s press release regarding the proposed changes, the purpose of the changes is to more effectively identify investors that have the “knowledge and expertise” to safely invest in private markets without the additional investor protections created by the filing requirements of the Securities Act of 1933 (the “Securities Act”).[2]
Continue Reading SEC Proposes to Update “Accredited Investor” Definition
Last year the U.S. Securities and Exchange Commission (“SEC”) approved Regulation Best Interest (“Reg BI”).[1] Reg BI requires broker-dealers and their associated persons to act in “the best interest” of a retail customer when recommending a securities transaction or investment strategy. Reg BI applies not only to broker-dealers but also to investment advisors.[2] It will take effect in June of 2020.[3]
Continue Reading It’s the Final Countdown: Being Prepared for Regulation Best Interest