More On Legal & Compliance
from The Advisor's Professional Library- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communications—to clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
- Pay-to-Play Rule Violating the pay-to-play rule can result in serious consequences, and RIAs should adopt robust policies and procedures to prevent and detect contributions made to influence the selection of the firm by a government entity.
The Securities and Exchange Commission announced Monday that Diamondback Capital Management has agreed to settle charges of insider trading for more than $9 million.
The charges, brought Jan. 18 by the agency, apply to the firm’s trading of shares of Dell Inc. and Nvidia Corp. stock in 2008 and 2009. While the proposed settlement is subject to the approval of Judge Paul G. Gardephe of the U.S. District Court for the Southern District of New York, as part of the proposed settlement, the Stamford, Conn.-based hedge fund adviser also has submitted a statement of facts to the SEC and federal prosecutors, and entered into a nonprosecution agreement with the U.S. Attorney’s Office for the Southern District of New York.
George S. Canellos, director of the SEC’s New York Regional Office, said in a statement, “We are pleased to have reached a prompt resolution of the charges against Diamondback. If approved by the court, we believe that the proposed settlement appropriately sanctions the misconduct while giving due credit to Diamondback for its substantial assistance in the government’s investigation and the pending actions against former employees and their codefendants.”
The SEC filed insider-trading charges last week against Diamondback, a second hedge fund advisory firm, and seven individuals, including a former Diamondback analyst and former Diamondback portfolio manager. Under the proposed settlement, Diamondback will give up more than $6 million of allegedly ill-gotten gains and pay a $3 million civil penalty. In addition, Diamondback consented to a judgment that permanently enjoins it from future violations of federal antifraud laws.
In reaching the proposed settlement, the SEC said it “considered the substantial cooperation that Diamondback provided, including conducting extensive interviews of staff, reviewing voluminous communications, analyzing complex trading patterns to determine suspicious trading activity, and presenting the results of its internal investigation to federal investigators.”
