CCH WALL STREET LAUNCHES NEW INVESTMENT ADVISER COMPLIANCE MANUAL PRODUCT
5.28.2004 Just in time for investment advisers racing to be in compliance with the new SEC compliance procedure rules, CCH Wall Street has come out with the Investment Adviser Compliance Manual (IAM). After the investment adviser user answers a series of questions, the IAM software generates a manual that is tailored to the specifications of the firm. To further tailor the manual, the adviser can use an editing utility called the IAM Wizard.
Another feature is IAM Online, which gives the adviser ready online access to its manual. Both the adviser's current and archived manuals can be retained here and made available to the adviser and its advisory personnel, making the manual extendable throughout the organization.
Moneymanagerservices.com LLC partnered with CCH Wall Street to create the manual content.
Please click http://www.wallstreet.cch.com/compliancetools/iammanager/ for information about CCH Wall Street Investment Adviser Manual (IAM).
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SEC ADOPTS RULE REQUIRING INVESTMENT ADVISERS TO ADOPT A CODE OF ETHICS
5.26.2004 The SEC adopted Rule 204A-1 under the Investment Advisers Act of 1940 Act that requires SEC-registered investment adviser to adopt a code of ethics governing personal trading by advisory employees and requiring employees to report their trades. Each investment adviser will have to have a code of ethics that also sets forth standards of conduct expected of advisory personnel, safeguards material nonpublic information about client transactions, and addresses conflicts that arise from personal trading by advisory personnel. The SEC stated that the rule is designed to promote compliance with fiduciary standards by advisers and their personnel. The SEC also adopted amendments to Part II of Form ADV to require advisers to describe their codes of ethics to clients and, upon request, to furnish clients with a copy of the code of ethics.
Please click http://www.sec.gov/litigation/litreleases/lr18687.htm for a copy of the administrative action.
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SEC DIRECTOR NOT CONVINCED ABOUT MUTUAL FUND INDUSTRY’S DESIRE TO REFORM
5.20.2004 Paul Roye, the Director of the SEC’s Division of Investment Management, speaking at the Investment Company Institute’s General Membership meeting in Washington, D.C., raised concerns about the mutual fund’s industry desire to reform. In response to one of the most significant scandals in the history of mutual funds, the SEC has proposed and adopted numerous rules. In a few cases, the industry has opposed some of the SEC rule proposals, including a 4 p.m. trading deadline. Mr. Roye noted that a number of mutual fund complexes had filed comment letters opposing this and other rules. In his view, opposition by the industry was unexpected and may suggest that the industry may not be committed to truly reforming itself.
Please click http://www.sec.gov/news/speech/spch052004pfr.htm for a copy of the speech.
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ADVISER COMPLIANCE OFFICER BARRED FROM THE INDUSTRY
5.20.2004 The SEC barred Thomas A. Hooker, Jr., a former compliance officer of Strong Capital Management, Inc. (SCM), from association with any investment adviser, and prohibited him from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter.
In the same proceeding, the SEC found that Richard S. Strong, President and founder of SCM and the Strong Funds, violated his fiduciary duties to the Strong Funds and their shareholders, by frequently trading shares of the Strong Funds. According to the release, Hooker in 2000 noted Strong's frequent trading in a compliance review. Hooker informed Strong entities' in-house counsel, who was also the Chief Compliance Officer and his supervisor, of Strong's trading. At that time, Strong agreed that he would stop frequently trading the Strong Funds. The in-house counsel directed Hooker to monitor Strong's trading activity to ensure that he had stopped frequent trading.
Strong continued to trade through 2003. The SEC found that Hooker failed to follow up to ensure that Strong's trading activity had in fact stopped. There were no compliance measures implemented to monitor or prohibit his frequent trading activity, such as a review of his mutual fund trades to determine whether they were inconsistent with the prospectuses for the Strong Funds he traded.
Please click http://www.sec.gov/litigation/admin/34-49741.htm for a copy of the administrative order.
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TENNESSEE ADVISER SETTLES CHARGES OF ISSUING MISLEADING PERFORMANCE REPORTS
5.19.2004 Lee Bradford Arberg, a former vice president of Hemisphere Trading Company, an investment adviser registered with the SEC, agreed to settle with the SEC, resulting in him being barred from the investment advisory industry. Previously, Mr. Arberg had pled guilty in a federal district court to charges that his firm had employed devices, schemes and artifices to defraud and engaged in transactions, practices, and courses of business that operated as a fraud and deceit upon clients. Specifically, his advisory firm falsified and delivered to clients quarterly performance reports containing untrue statements of material fact and which were otherwise false and misleading.
Please click http://www.sec.gov/litigation/admin/ia-2237.htm to access a copy of the administrative release.
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TEXAS ADVISER FAILED TO PROVIDE PROPER RISK DISCLOSURE
5.17.2004 2004 Warren Asset Management, LLC (WAM), an SEC-registered investment adviser located in Texas, and its sole owner and manager, Weldon R. Warren, were the subject of an SEC civil action, in which the SEC alleged that they misled clients about their investment performance record. In addition, Warren and his firm failed to properly disclose a fee increase for a hedge fund advised by WAM, placed the funds of their clients in highly leveraged investments without disclosing many of the associated risks, and failed to maintain and provide to their clients a wide assortment of required records. The SEC also alleged that Warren failed to comply with the SEC's examination process, by refusing to respond to the staff's requests for information and documentation. The SEC revoked WAM's investment adviser registration and barred Warren from association with any investment adviser.
Please click http://www.sec.gov/litigation/litreleases/lr18714.htm to access a copy of the administrative action.
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