August 14, 2022

Volume XII, Number 226

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August 12, 2022

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August 11, 2022

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Investment Adviser’s Enforcement Proceeding Results in Mutual Fund Industry Disqualification

On May 17, 2022, the SEC announced administrative proceedings against an investment adviser involving a fraudulent scheme to conceal the risks and performance of a complex options trading strategy that lost billions of dollars for various institutional investors. In connection with the announcement, criminal charges were filed against the adviser and three former senior portfolio managers. The adviser agreed to plead guilty to the criminal charges and settle the SEC’s administrative proceedings as part of an integrated, global resolution, including more than $1 billion to settle the SEC charges and over $5 billion in restitution.

As a result of the guilty plea—and because the SEC did not grant a waiver of disqualification under Section 9 of the Investment Company Act—the investment adviser was automatically and immediately disqualified from providing advisory services to registered funds for the next ten years. The SEC’s press release announcing the settlement stated that the adviser would exit the business of providing advisory services to registered funds, following a brief transition period to allow impacted funds to engage a new adviser.

The SEC’s press release is available here.

© 2022 Vedder PriceNational Law Review, Volume XII, Number 161
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About this Author

Nathaniel Segal Investment Attorney Vedder Price Law Firm
Counsel

Nathaniel Segal is counsel at Vedder Price and a member of the Investment Services group. He focuses his practice on investment companies and investment advisers in connection with the organization and operation of investment products and services, including traditional mutual funds, closed-end investment companies (including interval funds and listed closed-end funds), variable insurance products and registered hedge funds, as well as mutual funds utilizing complex hedging and absolute return strategies. Mr. Segal has experience in conducting transactional due diligence...

(312) 609 7747
Jacob Tiedt,Vedder Price law firm investment services attorney
Shareholder

Jacob C. Tiedt is a Shareholder at Vedder Price and a member of the Investment Services group.

Mr. Tiedt’s practice includes the representation of registered mutual funds, closed-end funds and exchange-traded funds; private funds; investment advisers; and other financial institutions on a broad range of regulatory, governance and compliance matters. Mr. Tiedt regularly counsels clients on matters relating to SEC registration, disclosure and compliance; shareholder solicitation; NYSE, Nasdaq and FINRA regulation; corporate governance; and board administration. Mr....

312-609-7697
John Marten Investment Attorney Vedder Price Law FIrm
Shareholder

John S. Marten, a Shareholder in the Chicago office of Vedder Price, has substantial experience representing clients in the investment management industry.

As a member of the firm’s Investment Services group, Mr. Marten counsels clients on a wide variety of matters involving the application of the federal securities laws to investment companies, investment advisers and broker-dealers. He has significant experience counseling investment company clients with respect to new products and was recently involved in the creation of two mutual funds...

(312) 609 7753
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