Jonathan Forman Talks with "Hedge Fund Law Report" about SEC Enforcement Actions for Inadequate Policies and Procedures

News / December 4, 2017

Counsel Jonathan Forman is quoted in an article published in the Nov. 30, 2017, issue of The Hedge Fund Law Report. The article, “Will Inadequate Policies and Procedures Be the Next Major Focus for SEC Enforcement Actions?” discusses recent actions taken by the Securities and Exchange Commission (SEC) against investment advisers for not tailoring their policies and procedures to the risks of their business operations.

Forman noted that, although there have been signals that the SEC will move away from its broken windows policy: “As far as insider trading cases go, those cases will continue to be a big part of the SEC’s enforcement agenda because they fit within Chair Clayton’s focus on securities fraud violations that affect market integrity. Those types of cases also are more easily prosecuted these days with the various data analytics the SEC is now utilizing.”

Regarding an enforcement action involving compliance in the handling of material nonpublic information (MNPI), Forman remarked: “When interacting with research firms, it was completely on the employees to determine whether they were in possession of MNPI or in a situation in which MNPI might be exchanged and needed to be verified by the compliance department. Had compliance oversight been implemented, a number of red flags would have been raised, requiring them to undertake a little more work to make sure that the information exchanged could be traded on.”

Read the article (registration required).