SEC Order Confirms the Agency’s Focus on Investment Advisers That Improperly Claim the Imprimatur of SEC Registration

One area of the SEC’s focus in 2015 will be on managers who are ineligible for registration as investment advisers under the Investment Advisers Act but who, through fraudulent inflation of assets under management or other means, nevertheless improperly apply for and maintain such registrations.  As reported in the Hedge Fund Law Report, speaking at the Regulatory Compliance Association’s Compliance, Risk and Enforcement 2014 Symposium, Ken Joseph, associate director in the SEC’s New York Regional Office, stated that the SEC will be examining firms trying to take advantage of marketing or other benefits – perceived or actual – available only to SEC-registered investment advisers, when those firms should not be so registered.  See “RCA Compliance, Risk and Enforcement 2014 Symposium Highlights SEC Exam Priorities and Focus Areas, Mitigating Regulatory Filing Risk and Key AIFMD Issues for Non-E.U. Managers (Part One of Two),” Hedge Fund Law Report, Vol. 8, No. 7 (Feb. 19, 2015).  In a recent action against such an improperly registered adviser, the SEC has confirmed this focus.

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