Investment Management Law: SEC Requires Hedge Fund Manager to Send Enforcement Order to Clients and Prospects

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Investment Management Law: SEC Requires Hedge Fund Manager to Send Enforcement Order to Clients and Prospects

SEC Requires Hedge Fund Manager to Send Enforcement Order to Clients and Prospects

A hedge fund manager, alleged to have violated several provisions of the securities laws, will be required to deliver a copy of the SEC Order to all existing clients and to all prospective clients for a period of 2 years. The SEC charges the manager for failing to conduct a surprise exam in violation of the custody rule, failing to inform clients that affiliated funds shared assets, failing to obtain third-party valuations, and appointing a Chief Compliance Officer who had no compliance training or experience. The SEC has also required the Respondent to retain an independent consultant and pay a $100,000 fine.

OUR TAKE: Sending the Order to clients and prospects will likely hurt the Respondent more than any fine would.

http://www.sec.gov/litigation/admin/2011/33-9187.pdf

Posted by Todd Cipperman at 2/25/2011 7:00 AM

Categories: Compliance and Operations
Tags: enforcement order notice to clients

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