ROYE SPEAKS AT INVESTMENT ADVISER CONFERENCE
4.8.2002 Paul Roye, Director of the SEC's Division of Investment Management, spoke at the IA Compliance Summit and Best Practices Update in Washington, DC. He spoke on the SEC's priorities in the area of investment adviser regulation. Topics included:
- Part II of Form ADV;
- contingency planning;
- anti-money laundering;
- Internet advisers;
- adviser advertising rule;
- principal transactions rule;
- exemptions for broker-dealers and thrifts;
- custody and recordkeeping rules; and
- compliance and enforcement.
Please click http://www.sec.gov/news/speech/spch549.htm to access a copy of the speech.
Back To The Top
OCIE DIRECTOR OUTLINES AREAS OF FOCUS FOR INVESTMENT ADVISER EXAMS
4.8.2002 Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations (OCIE), spoke at National Regulatory Services Spring Compliance Conference in Miami Beach, Florida about key issues upon which her office will focus on this year.
With respect to investment adviser exams, OCIE will focus on disclosure in Part II of advisers' Form ADVs, performance advertising, best execution, sales practices, and suitability of investment recommendations.
With respect to hedge funds, Ms. Richards noted that an increasing number of advisers are permitting one or more of their portfolio managers to create and manage a hedge fund side-by-side with the portfolio manager's management of a registered investment company or traditional separate accounts. During every inspection in which the SEC finds side-by-side management of hedge funds, it will focus on how the adviser allocates securities and whether the adviser is managing all of its accounts appropriately.
Please click http://www.sec.gov/news/speech/spch548.htm to access a copy of the speech.
Back To The Top
MUTUAL FUND INDEPENDENT COUNSEL MAY ALSO SERVE AS INDEPENDENT DIRECTOR
4.3.2002 The SEC issued a no-action letter that permits an independent counsel to the independent directors of a mutual fund to also be an independent director of a mutual fund. Carl Frischling serves as a director to various AIM Funds. Mr. Frischling is also a partner in the law firm of Kramer Levin Naftalis & Frankel LLP. Since September 1994, Kramer Levin has served as legal counsel to the independent directors of the AIM Funds. Mr. Frischling and another Kramer Levin partner are the primary attorneys responsible for the representation of the independent directors.
The Investment Company Act of 1940 requires a certain percentage of directors of a mutual fund to be independent; i.e., to not be an interested person of the mutual fund. Section 2(a)(19)(iv) of the Investment Company Act of 1940 defines interested person to mean any person who has acted as legal counsel to the mutual fund. The attorney in question did not want to be deemed to be an interested person of the mutual fund because he provided legal services to the fund's independent directors.
In granting no-action relief, the staff stated that the "fact that a fund pays the legal expenses of the independent directors' legal counsel, incurred by the independent directors in their official capacity for the fund, would not, by itself, mean that such counsel is acting as the fund's legal counsel for purposes of Section 2(a)(19)(iv). Therefore, counsel to independent directors may themselves serve as independent directors." The SEC warned that as a matter of policy, that it generally would not respond to any no-action request regarding whether, for purposes of Section 2(a)(19)(A)(iv), a person's activities are limited to acting solely as legal counsel for the independent directors of a fund.
Please click http://www.sec.gov/divisions/investment/noaction/aim040302.htm for a copy of the no-action letter.
Back To The Top
SEC APPOINTS NEW GENERAL COUNSEL
4.3.2002 The SEC appointed Giovanni P. Prezioso to serve as general counsel of the agency. Prezioso is a partner in the Washington office of the international law firm of Cleary, Gottlieb, Steen & Hamilton.
Please click http://www.sec.gov/news/press/2002-51.txt for a copy of the press release announcing the appointment.
Back To The Top
TRO ENTERED AGAINST DREYFUS FUND DIRECTOR
4.1.2002 The SEC filed an action for a temporary restraining order (TRO) against Martin D. Fife, a Dreyfus fund director, Dennis Herula, a former Raymond James broker, Mary Lee Capalbo, a Rhode Island attorney, Charles Sullivan, a former New England Patriots official, and others in connection with a fraudulent scheme. These persons were alleged to have perpetrated a scheme that raised at least $52 million from investors between 1999 and 2001.
The SEC alleged in its complaint that British citizen Michael Clarke and others promised investors exorbitant returns (such as a nearly 300% return in twelve banking days) through a high yield trading program purportedly operated by Fife under various names, including Brite Business and Seaview Development and Holdings, Ltd. According to the SEC's complaint, these representations were false because such high yield trading programs do not exist, and several of the defendants have misappropriated or otherwise failed to return over $20 million to investors.
Please click http://www.sec.gov/litigation/litreleases/lr17461.htm to access a copy of the administrative action.
Back To The Top
TEXAS ADVISER CHARGED WITH FRAUD
4.1.2002 The SEC charged Thomas J. Kearns of Dallas, Texas with operating a fraudulent scheme where he induced clients to liquidate existing investments and place the proceeds with him for management. Kearns allegedly told clients that he would invest the proceeds in a safe manner that would return at least 9% to 10% annually. The SEC found Mr. Kearns to be an unregistered adviser and to have not invested the proceeds in a manner consistent with representations made to clients.
Please click http://www.sec.gov/litigation/admin/ia-2026.htm to access a copy of the administrative action.
Back To The Top
To return to previous news stories, please click PREVIOUS NEWS.
