Conquering Current Compliance Challenges
June 12, 2019 | 2:00 - 2:30 PM EST

Conquering Current Compliance Challenges
Recorded: May 15, 2019 
Includes: Best Practices, Key Regulatory Issues and Compliance Tips
Includes: 23 Best Practices, 5 Peer-tested tools and 15 No Action Letters

Cybersecurity Strategies to Ensure SEC Compliance, 2nd Edition
Includes: 24 Best Practices, 16 Tools, 4 Risk Alerts and IM Guidance


Investment Advisers Act section 204A requires investment advisers to establish, maintain, and enforce written P&Ps reasonably designed to prevent the misuse of material, non-public information by the investment adviser or any of its associated persons.  Investment advisers also have a duty to supervise persons associated with the investment adviser with respect to activities performed on the adviser’s behalf, the SEC notes.
The SEC’s Enforcement Division continues to diligently pursue insider trading cases.  Over the past five years, the SEC has brought 580 insider trading cases, notes Enforcement Director Andrew Ceresney.  The SEC has stated that it will hold private fund advisers accountable when their employees violate the securities laws.
There are best practices for compliance to pursue in an effort to curb or detect insider trading.  You can add an attestation to your firm’s annual certification that has the employee attesting to not having engaged in a trade in the last year involving material, non-public information.  You can also augment your firm’s pre-clearance transaction form with a question asking if the staffer was in possession of any material, non-public information in connection with the security being traded.  Scanning the trade blotter for signs of a spike in a certain security and training staff on the risks of insider trading are further best practices.

Cases going forward

Interestingly, the government’s ability to bring insider trading cases recently took a hit via a court case.  A 2nd Circuit U.S. Court of Appeals decision in U.S. v. Newman stated that the government’s case lacked evidence that the defendants knew if the original tippees received any benefit for passing on their confidential information.  The Newman standard for insider trading has led to proposed legislation to clearly define the offense of insider trading under the law and to strengthen the prohibition on insider trading.

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