Doug Cornelius

The One That is a Hollywood Story

By Doug Cornelius

May 2, 2021

Zach Horwitz was struggling actor using the stage name “Zach Avery.” His IMDB entry lists him in minor parts in mostly bad movies. His biggest movie role is an uncredited part as a medic in Brad Pitt’s “Fury.” Mr. Horowitz couldn’t figure out how to get rich and famous, but he did hatch a plan to get rich. Mr. Horwitz told investors that he had acquired and distributed dozens of cheap films including titles such…

Compliance Building

Compliance Bricks and Mortar for April 30

By Doug Cornelius

April 30, 2021

These are some of the compliance-related stories that recently caught my attention. The Bizarre Case of Snowden and a Get-Rich-Quick Real Estate Investing ConferenceJack PoulsonVice.com Edward Snowden joined an online “elite real estate investment club” Saturday afternoon, spoke for several minutes about whistleblowing, called out one of the hosts for allegedly running a Ponzi scheme, then logged out in one of the more bizarre online conferences in recent memory. https://www.vice.com/en/article/epndnz/the-bizarre-case-of-snowden-and-a-get-rich-quick-real-estate-investing-conference Bitcoin, We Have a …

Compliance Building

The One With the Lack of Write-Downs

By Doug Cornelius

April 25, 2021

I think many frauds start with a failure to recognize mistakes. Yes, it’s hard to tell your investors that you lost some of their money. It makes it harder to attract new investors and additional investments. It gets really hard to do that when you go to jail. Martin Silver was the co-founder, managing partner, and chief operating officer of the International Advisory Group LLC. The firm was an investment adviser that specialized in trade finance…

Compliance Building

Compliance Bricks and Mortar for April 23

By Doug Cornelius

April 23, 2021

These are some of the compliance-related stories that recently caught my attention. Alex Oh Named SEC Director of Enforcement Washington D.C., April 22, 2021 — The Securities and Exchange Commission today announced that Alex Oh has been appointed Director of the Division of Enforcement. Oh was most recently a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP and co-chair of the law firm’s Anti-Corruption & FCPA Practice Group. She was previously an Assistant U.S.…

Compliance Building

Withdrawal of No Action Letters

By Doug Cornelius

April 19, 2021

In connection with Securities and Exchange Commission’s new Marketing Rule, I’m expecting the SEC to withdraw a bunch of the no-action letters that address advertising by registered investment advisers. For example, the Clover no-action letter doesn’t seem to fit with the new Marketing Rule and will likely have to be withdrawn to avoid confusion. The release for the Marketing Rule stated so. Additionally, pursuant to the staff’s review, the staff will be withdrawing the…

Compliance Building

Compliance Bricks and Mortar for April 16

By Doug Cornelius

April 16, 2021

These are some of the compliance-related stories that recently caught my attention. U.S. Senate votes 53-45 to confirm Gary Gensler as Biden’s SEC chiefKatanga JohnsonReuters “Gary Gensler has the perfect mix of market expertise, regulatory experience and commitment to the public interest to be an outstanding SEC Chairman,” said Barbara Roper, chief investor advocate at Washington-based Consumer Federation of America. https://www.reuters.com/business/finance/us-senate-votes-53-45-confirm-gary-gensler-bidens-sec-chief-2021-04-14/ Is Your Compliance Program Consumed by Process Rather Than Outcomes?Duncan MilneSCCE’s The…

Compliance Building

Individuals as Qualified Purchasers

By Doug Cornelius

April 14, 2021

To pull the pieces together, private funds are exempt from the Investment Company Act under Section 3(c)(1) or Section 3(c)(7). Under (1) the fund is limited to 100 investors. Under (7), there is no limit on the number of investors, but the investors have to be “Qualified Purchasers.” The definition of “qualified purchaser” in Section 2(51)(A) includes individuals as (i) any natural person … who owns not less than $5,000,000 in investments, as defined…

Compliance Building

Suspicious Activity Reporting

By Doug Cornelius

April 13, 2021

The Securities and Exchange Commission’s Division of Examinations released a Risk Alert on Compliance Issues Related to Suspicious Activity Monitoring and Reporting at Broker-Dealers. While it spent most of the publication laying out the vague requirements of reporting suspicious activity, it took a sharp turn and listed six types of activities that the SEC would consider suspicious activity that should be reported. Large deposits of low-priced securities, followed by the near-immediate liquidations of those…

Compliance Building

SPAC, SMACK, SHAQ?

By Doug Cornelius

April 13, 2021

SPACs are the current tulips of the markets. Everyone wants a piece of one. Celebrities are joining the rush. As noted in the title, Shaq has one. Actually Shaq is on his second SPAC. Almost 250 SPAC IPOs were completed in 2020, raising total gross proceeds of approximately $75 billion That was about half of the number of IPOs and half of the capital raised in IPOs. There are lots or reasons for companies…

Compliance Building

Form ADV FAQ Comes a Little Late

By Doug Cornelius

April 12, 2021

Most investment advisers filed their form ADVs last week, before the March 31 filing deadline. That didn’t stop the Securities and Exchange Commission from publishing a new FAQ about Form ADV on April 6. Hopefully you got it right. There has been some questions about office locations that need to be disclosed on Form ADV during the pandemic. The general thought was that temporarily working from home during the pandemic didn’t need to be disclosed.…

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The One That is a Hollywood Story

Compliance Bricks and Mortar for April 30

The One With the Lack of Write-Downs

Compliance Bricks and Mortar for April 23

Withdrawal of No Action Letters

Compliance Bricks and Mortar for April 16

Individuals as Qualified Purchasers

Suspicious Activity Reporting

SPAC, SMACK, SHAQ?

Form ADV FAQ Comes a Little Late

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