Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The SEC recently commenced an enforcement action against a registered investment adviser who allegedly “offered more than $500 billion in fictitious securities through various social media websites. For example, he used LinkedIn discussions to promote fictitious “bank guarantees” and “medium-term notes.””

Obviously a situation to be dealt with harshly.  We should appreciate the SEC’s vigilance in identifying and pursuing this individual.

But in addition to pursuing this individual, the SEC has issued this seven page “National Examination Risk Alert” which outlines numerous controls and procedures an investment adviser which uses social media should consider implementing.  Let’s face it, fraudsters will only ignore the document, and it will impose substantial costs on honest advisers.  It looks to us that compliance with these procedures will be on the top of the list for investment advisers undergoing routine examinations.  As a result, we recommend advisers to private equity groups and hedge funds that are newly required to register under the Dodd-Frank Act make sure that compliance procedures under development cover this topic.

Check frequently for updates on the Dodd-Frank Act and other important securities law matters.

Leave a Reply

Your email address will not be published. Required fields are marked *