On Dec. 21, HKMA warned misconduct risks in selling of funds. HKMA letter to draw attention to misconduct risk in selling of investment funds. Provide guidance on expected standard of prevention and management of risk. Reminded registered institutions (RIs) to ensure investment recommendations, or solicitation for customers were reasonable in all circumstances. Firms must act…
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SEC Charges Two Robo-Advisers
On Dec. 21, SEC charged two robo-advisors with false disclosures. Wealthfront Advisers LLC (formerly known as Wealthfront), and Hedgeable Inc. Wealthfront Alleged Violations Wealthfront with $11bn client assets made false statements re tax-loss harvesting. Disclosed to that by employing its tax-loss harvesting strategy it would monitor all client accounts for transactions that might trigger a…
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SEC $1.8mn Fine Fund Disclosure
On Dec. 21, SEC fined IAs $18mn for fund disclosure violations. American Portfolios Advisors, PPS Advisors, and CEO/CIO, Lawrence Passaretti. Invested clients in mutual fund share classes that paid 12b-1 fees to the firms' investment adviser representatives (IARs), even when cheaper class available. Alleged Violations Firms did not disclose conflicts of interest, violated duty to…
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SEC $1.2bn Woodbridge Ponzi
On Dec. 19, SEC charged additional brokers in Woodbridge Ponzi. Charges against further 13 brokers, who sold Woodbridge securities to investors. Also charged 10 companies who had unlawfully sold these Woodbridge securities. Woodbridge Background Woodbridge collapsed into bankruptcy in Dec. 2017. and SEC previously charged company, its sowner and others with operating $1.2bn Ponzi scheme. 13…
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SEC Panasonic Accounting Fraud
On Dec. 18, SEC charged Panasonic executives with accounting fraud. Paul Margis, CEO of Panasonic Avionics used a third party to pay over $1.76mn to consultants, including government official who was offered a consulting position. This would assist in obtaining and retaining business from a state-owned airline. Company falsely recorded payments, and Margis circumvented company…
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UK FCA MAR Compliance
On Dec. 17, UK FCA issued Market Watch 58 on MAR compliance review. Reviewed industry implementation of MAR, outlined findings, offered clarification. Considered manufactured credit events in the credit default swap (CDS) market. MAR Compliance Expect firms to be fully compliant with obligation to undertake quote surveillance. FCA issued a reminder about suspicious transaction and…
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