SEC Rule 206(4)-8

After reviewing a recent case, Janaya Moscony offers lessons learned and explains why this matters for advisers.

Reported charges included selling pre-IPO shares the defendants did not possess, undisclosed fees, and mixing investor funds.

Final settlement orders announced last week include those against firms for infractions often based in compliance program lapses.

The SEC said the company represented to private fund investors that the firm was voluntarily complying with AML due diligence laws despite actual processes for same being used.

The charges arise from prospectuses stating that the company would exclude ESG-negative industries from its investments.

The SEC said the business also favored certain advisory clients when directing and executing cross trades, in violation of its fiduciary duty.

Enforcement actions addressed a failure to develop a mutual fund AML programme along with misstatements in its ESG investment process.

Defendants allegedly used funds from deceased beneficiaries’ accounts on golf tournaments and beach parties.