Gatekeepers and Service Providers Remain in the SEC’s Crosshairs

Although the primary and ultimate duty to comply with the federal securities laws rests with registered investment advisers, the SEC has traditionally looked to so-called “gatekeepers” and other service providers as an additional line of defense. Two recent SEC enforcement matters are an important reminder that the SEC continues to focus on gatekeepers in its efforts to combat investment adviser fraud. In the first, a civil complaint against an attorney, the SEC alleged that the attorney committed securities fraud by knowingly helping clients evade securities registration requirements and making false statements in SEC filings she prepared. The second matter – an SEC settlement order against two fund administrators – claims that their failure to act on certain red flags caused violations by the funds’ investment adviser. This article details the facts and circumstances of the two enforcement matters and discusses the implications of those matters for private fund attorneys and other service providers. See “Transparency Tops Investment Considerations in Northern Trust Survey” (Jun. 29, 2017).

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