By Elin Cherry, Compliance Risk Concepts
On September 18, 2014, the SEC issued a final Order against registered investment adviser – Strategic Capital Group (“SCG”). The Order was a typical laundry list of wrong doings by SCG:
- SCG engaged in hundreds of securities transactions with advisory clients on a principal basis through its affiliated registered broker – dealer, RP Capital, LLC (“RP Capital”), without providing prior written disclosure to, or obtaining consent from, the clients.
- SCG Forms ADV Part 1A filed in 2012 and 2013, SCG incorrectly stated that neither it nor any related person engaged in principal transactions.
- SCG failed to seek best execution in determining to route its clients’ fixed-income transactions to RP Capital.
- SCG provided prospective clients advertisements that contained false and misleading claims and disclosures about the performance of SCG’s investment model. The advertisements were also publicly available on * SCG’s website for at least a month.
- SCG’s Chief Executive Officer, and its Chief Compliance Officer failed to implement SCG’s compliance policies and procedures that were reasonably designed to prevent violations of the Advisers Act.
Read more on “Are you CEO and CCO? : The Genuine Cost of Non-Compliance” »
Alternative asset managers are starting to take regulatory compliance more seriously, with a spike in hiring of compliance professionals this year. The shift comes even amid evidence that some managers, especially smaller ones, seem to take a dismissive view toward compliance – an attitude that experts say could cost them dearly in the long run.
Managers are responding by creating and filling new compliance positions, and there’s a lot of activity, says Jason Wachtel, founder and managing partner at JW Michaels & Co., a recruiting firm that specializes in compliance and legal hires. “Across the board, everybody’s hiring,” he says. “I’ve never seen it this busy before.” He expects that pace to continue for the rest of this year and into 2015 and beyond, he adds.
Read more on “Shift Happens | Corporate Culture For Compliance Hiring” »
This article originally published in the Wall Street Journal : The Morning Risk Report
The boom in the hiring of chief compliance officers and mid-level compliance staff is driven by not only an explosion of rules and regulations but by the fear of becoming the next poster child for wrongdoing, says an executive at a national recruitment firm specializing in hiring of compliance officers and legal personnel.
Rules and regulations such as the Volcker Rule and Dodd-Frank Act, which marks its fourth anniversary later this month, have served as a wake-up call to banks, hedge funds and private equity firms that it’s better to spend money on compliance than to get fined millions or billions of dollars, then suffer additional losses as investors pull money, said Jason Wachtel, managing partner of recruitment firm JW Michaels & Co. His firm has increased its staff from two people to 50 since the financial crisis hit in 2008. “If you’re a hedge fund or private equity firm with more than $500 million under management, you’re looking for really talented people for compliance and legal,” he said. “Most firms have hired their chief compliance officer in the last two years and now are further building out their compliance infrastructure. They need more hands on deck.”
Read more on “Wall Street Journal: Hire Compliance Now, or Get Fined Later” »