SEC report on safeguarding of confidential information
The SEC has issued a staff report intended to help broker-dealers to safeguard confidential information from misuse, such as insider dealing. The report, compiled by the Office of Compliance Inspections and Examinations (OCIE) describes strengths and weaknesses identified in examinations into how broker-dealers keep relevant non-public information from being misused.
The report identifies a number of conflicts of interest, areas of concern as well as highlighting effective practices that were observed during the examination of some broker-dealers.
SEC charges four brokers with defrauding customers
The SEC has charged four brokers who formerly worked on the cash desk at a New York-based broker-dealer with overcharging customers $18.7 million illegally by using hidden markups and secretly keeping portions of profitable customer trades. The brokers purported to charge very low fees however, the SEC alleges, that they were reporting false prices when executing the orders to purchase and sell securities on behalf of their customers. The SEC's investigation is ongoing.
SEC charges hedge fund managers with defrauding investors
The SEC has charged two hedge fund managers and their firms for lying to investors about how money invested in their respective hedge funds was handled. The charges represent the latest in a series of actions taken by the SEC against hedge fund-related misconduct in the markets. The SEC has published its complaints against both GEI Financial Services and Lion Capital Management.
The SEC has filed more than 100 cases involving hedge funds since the start of 2010. In light of the risks involved, the SEC has published an investor bulletin for those considering investing in hedge funds.