Jacko Law Group, PC (JLG) is very proud to present our new Legal Risk Management Tip for the month of March, authored by JLG’s recent addition to the legal team, Charles H. Field, Esq. Mr. Field has over 26 years of experience working with business leaders and senior executives on matters affecting investment advisors (IAs), broker-dealers (BDs) and private funds. His extensive knowledge of this field lends itself to our March Legal Tip, where Mr. Field details the intricacies, definitions, exemptions and impacts of commodity investments.

Last week, the Securities and Exchange Commission (“SEC”) published additional guidance on social media filings, in order to clarify the obligations that mutual funds and other investment companies have in seeking review of materials posted on their social media websites. This was done partly to increase transparency of federal securities laws and regulations, and partly as a response to claims by the Financial Industry Regulatory Authority (“FINRA”) (the body responsible for reviewing those advertisements required to be submitted by mutual funds and other investment companies) that several “unnecessary” submittals have occurred due to firms being overly-cautious.

Recently, the Securities and Exchange Commission (“SEC”) issued a Risk Alert (the “Alert”) concerning rule 206(4)-2 of the Investment Advisers Act of 1940 (the “Rule”), commonly referred to as “The Custody Rule” for investment advisers. The Alert was issued as a response to recent examinations conducted by the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) who found significant deficiencies in this area in nearly one-third of firms that were examined. The following items were provided by OCIE as some of the more common deficiencies discovered:

The U.S. Supreme Court (the “Court”) last week unanimously reversed a 2nd U.S. Circuit Court of Appeals decision, effectively mandating the Securities and Exchange Commission (“SEC”) to file complaints seeking civil penalties for securities fraud within five years of the alleged incident, not five years after the alleged incident is discovered.