Tag Archives | enforcement

Turnkey Governance Problematic at Northern Lights

Some trusts are created as turnkey mutual fund operations that launch numerous funds to be managed by different unaffiliated advisers and overseen by a single board of trustees. The federal securities laws require all mutual fund directors to evaluate and approve a fund’s contract with its investment adviser, and the funds must report back to shareholders about the material factors considered by the directors in making these decisions. The SEC Enforcement Division’s Asset Management Unit has been taking a widespread look into the investment advisory contract renewal process and fee arrangements in the fund industry. Continue Reading →

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Corporate Directors Forum 2012 – Part 2: Robert Khuzami, SEC Director of Enforcement

These are some relatively quick notes that I’m sharing from the Corporate Directors Forum 2012, held on the beautiful campus of the University of San Diego, January 22-24, 2012. Since I am busy with no-action requests this proxy season, this post may be a cryptic… not complete sentences bt hopefully mor intelligible thN txt msgN.

Keynote Speaker: Robert Khuzami, Director, Division of Enforcement, U.S. Securities and Exchange Commission Continue Reading →

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Video Friday: FCPA Compliance

SVNACD Avoiding the Crosshairs.

  • A primer on anticorruption laws relevant to U.S. Companies, especially the Foreign Corrupt Practices Act (FCPA
  • Discussion of the ramifications of the new whistleblower provision of the
  • Dodd-Frank Act, particularly as it relates to FCPA enforcement
  • Insight into the nuts and bolts of investigating FCPA allegations and dealing with the Department of Justice and SEC
  • Understanding the need for proactive compliance efforts and what such efforts might be
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Enhancing Shareholder Value: What's Hot in M&A and IP

Wilson, Sonsini, Goodrich & Rosati

It had been months since I’d attended an SVNACD breakfast meetings. Top talent was on hand, both among the panelists and in the audience. The facility at Wilson, Sonsini, Goodrich & Rosati was great. Sorry about photo quality… first time working with a new camera that I may not keep.

As usual, my notes are cryptic, without much of an attempt to thread coherent sentences. I’m tempted to say the following is for entertainment purposes only, but that would be too escapist. Corrections, comments and better photos are welcome.

My purpose is to provide readers with a sense of what was discussed and highlight a few areas. It may help you know what to investigate further and you’ll be that much more incentivised to attend in person to get answers to your concerns.  Continue Reading →

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No One Knew it Existed: The SEC's Bounty Program

Since its inception in 1989, the SEC has paid out a grand total of $159,537. Five claimants have received money from the program since 1989, with one claimant taking home the bulk, $100k. The other four split $60,000. Bounty can’t exceed 10% of the amount recovered from a civil penalty but that limitation doesn’t seem to have been the problem, according to Assessment of the SEC’s Bounty Program,” released by SEC Inspector General H. David Kotz. The SEC report recommends adopting the

“best practices obtained from DOJ and the IRS into the SEC bounty program with respect to bounty applications, analysis of whistleblower information, tracking of whistleblower complaints, recordkeeping practices, and continual assessment of the whistleblower program… improvements are needed to the bounty application process to make it more user-friendly and help ensure that bounty applications provide detailed information regarding the alleged securities law violations. We also found that the criteria for judging bounty applications are broad and the SEC has not put in place internal policies and procedures to assist staff in assessing contributions made by whistleblowers and making bounty award determinations. Additionally, we found that the Commission does not routinely provide status reports to whistleblowers regarding their bounty applications, even if a whistleblower’s information led to an investigation. Moreover, we found that once bounty applications are received by the SEC and forwarded to appropriate staff for review and further consideration, they are not tracked to ensure they are timely and adequately reviewed. Lastly, we found that files regarding bounty referrals did not always contain complete documentation, such as a copy of the bounty application, a memorandum sent to the whistleblower to acknowledge receipt of the application, and a referral memorandum showing the office or division and official to whom the bounty application was referred for further consideration.

Harry Markopolos, who tried to warn the SEC about Bernard Madoff couldn’t get the SEC’s attention and later wrote No One Would Listen: A True Financial Thriller. Let’s hope their own Inspector General can get enough attention focused on the problem to fix it. (see SEC IG’s Report Details Insider Trading Bounties, Compliance Week, 4/2/10; $159,537 In Total Payments to Whistleblowers by the SEC Since 1989, DaveManuel.com, 4/2/10; The SEC’s Bounty Program, The Corporate Counsel.net Blog, 4/6/10)

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