Are You Considering Breaking Away?

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The number of advisers considering breaking away from a traditional broker-dealer business model is on the rise. According to the latest research from Echelon partners, last year alone, more than 400 teams broke away from their broker-dealers to go independent, with over 15% becoming their own RIAs.1

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Investment Adviser in Trouble with SEC After Failing to Disclose Solicitation Agreement

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Earlier this month, John Rafal, former president and CEO of Essex Financial Services, Inc., admitted wrongdoing and agreed to pay more than $575,000 in settlement charges.  According to the SEC, the Connecticut-based investment adviser defrauded a client, attempted to mislead the SEC’s enforcement investigators and lied to his other clients about the status of the SEC’s investigation.

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WORM Deficiencies: Are Your Electronic Records Safe?

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As part of FINRA’s ongoing efforts to crackdown on cybersecurity failures, the brokerage industry’s self-regulatory organization issued $14.4 million in fines to a dozen firms – including companies in the Wells Fargo & Co. and RBC Capital networks, RBS Securities Inc., SunTrust Robinson Humphrey Inc., LPL Financial, Georgeson Securities Corp. and PNC Capital Markets – for deficiencies related to their cybersecurity programs. Continue reading

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Expedia IT Specialist Charged with Insider Trading

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In an ideal world, companies would be able to trust their employees one-hundred percent. However, there are those who take advantage of their position within an organization to perform illegal activities. Unfortunately, that was the case with Expedia’s Jonathan Ly. Earlier this month, the SEC charged Mr. Ly, an information technology specialist in Expedia’s corporate IT services department, with insider trading. Continue reading

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Purported “Angel” Investor Defrauded Investors Out of Millions

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Last week, Alberto Chang-Rajii and his asset management company, Onix Capital LLC, were charged with fraud by the SEC. Using false claims of Chang’s wealth and investment success as an award-winning multi-millionaire “angel” investor, Chang and Onix apparently defrauded investors out of millions of dollars. In addition to the claims of fraud, the SEC announced an asset freeze against the Miami Beach-based company and its owner. Continue reading

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SEC Risk Alert: OCIE Examines Registrants’ Compliance with Whistleblower Rule

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On October 24, 2016, citing a recent increase in SEC enforcement actions pertaining to Rule 21F-17 of the Securities Exchange Act of 1934 (“Exchange Act”), the SEC issued a National Exam Program Risk Alert regarding examinations of investment advisers’ and broker-dealers’ compliance with the Whistleblower Rule.

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Caution: SEC Looks at More Than Just Policies and Procedures for Whistleblower Violations

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Earlier this month, Health Net Inc. agreed to pay a $340,000 penalty for illegally using severance agreements that required employees leaving the company to waive their right to obtain monetary awards from the SEC’s whistleblower program.  According to the SEC order, by doing this, the California-based health insurance provider directly targeted the Congress-authorized program.

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