In Janus Capital Group v. First Derivative Traders, No. 09525 (decided June 13, 2011), a divided U.S. Supreme Court ruled that an investment adviser to a mutual fund cannot be held directly liable under Rule 10b-5 for misstatements in the fund's prospectus.
Brookside Capital, LLC, a registered investment adviser based in Boston, was the subject of a recent administrative order issued by the SEC (SEC IA Release No. 3226, June 28, 2011) in connection with the violation by the Adviser of Rule 105 of Regulation M of the Securities Exchange Act of 1934 and Section 203(e) of the Investment Advisers Act of 1940.
The SEC has charged hedge fund manager Lawrence Goldfarb with diverting for himself and his related entities approximately $12 million of investment proceeds that belonged to the investors in a hedge fund he managed.
The SEC recently charged three affiliated investment firms and some of their senior executives with violations of the Investment Advisers Act of 1940, including fraud and misuse of client assets ((SEC v Landberg, S.D.N.Y., No. 11 CV 0404, 12011).
In a recent action, the SEC revoked the registration of Thrasher Capital Management, LLC, an investment adviser for, among other things, making false filings with the SEC.
The United States Department of Labor (DOL) filed a lawsuit against several New York investment management firms and their principals who provided advice to pension plans that invested with Bernie Madoff (Solis v. Beacon Associates LLC, S.D.N.Y., No. 10-CV-8000, 102110).
The SEC issued an Order Instituting Administrative Proceedings on September 15, 2009 against KHF Advisors, LLC (KHF Advisors) and against Appalachia Asset Management, Inc (Appalachia Asset), pursuant to Section 203(e) of the Investment Advisers Act of 1940.