Doug Cornelius

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Of course the lawyerly answer is: “maybe.” Ronald Duane Dunham challenged his criminal conviction for securities fraud, arguing that the Cherokee Village lots he sold did not qualify as securities under the California Corporation Code. Mr. Dunham got in this position by persuading a number of elderly victims to invest over a million dollars with him, ostensibly to purchase undeveloped “lots” of land in Cherokee Village, Arkansas, and/or support Dunham’s real estate development efforts there…
I grabbed the SEC case against Syed Arham Arbab for the headline and obvious jokes. Mr. Arbab is accused of running a fake investment scheme out of his college fraternity. He formed a fund called Artis Proficio Capital Investments, LLC with a business address of 558 W. Broad Street, Athens, GA 30601. (Go ahead and clink on the address link. Yes, it’s a picture of the fraternity house at that address, complete with big…
An SEC investigation found that Colorado-based investment adviser Deer Park Road , in connection with one of its funds, failed to have policies and procedures to address the risk that its traders were undervaluing securities and selling for a profit when needed.  The SEC fined a hedge fund $5 Million, and its Chief Investment Officer another $250,000, for failing to properly value portfolio securities. In the order, the SEC maintains that the firm failed to…
An SEC investigation found that Colorado-based investment adviser Deer Park Road , in connection with one of its funds, failed to have policies and procedures to address the risk that its traders were undervaluing securities and selling for a profit when needed.  The SEC fined a hedge fund $5 Million, and its Chief Investment Officer another $250,000, for failing to properly value portfolio securities. In the order, the SEC maintains that the firm failed to…
These are some of the compliance-related stories that recently caught my attention. Tuesday: Tax transparency, the myth of the unlevered IRRsPrivate Funds Management LPs want to know what effect this has on IRR. ILPA recommends that net IRR should be presented both with or without use of the credit facility, as referenced in this video from one of our sponsors Withum. This sensible-seeming suggestion may not be as simple as it seems. “Speed…
The Securities and Exchange Commission has been working on a way for consumers to better understand the difference between securities brokers and investment advisers. The Department of Labor made an attempt with respect to retirement plans, but that is a mess. I’m not sure how much of a mess the new Regulation Best Interest is going be for private fund managers. The devil is in the details and the details are in the 524 page
I’ve gotten worked up about CCO liability cases. Many have been sloppy about using consistent standards. A recent case case caught my eye because the CCO was charged because of identity theft. At first I thought the case might be an aggressive position to charge the CCO because a cybersecurity breach resulted in identity theft at the firm. I opened the case and was ready to be angry. Then, I discovered it was very strange…
The Securities and Exchange Commission published its Reg Flex Agenda for the Spring of 2019. This gives us some insight to what regulatory changes are in the works. Three items caught my eye as likely to apply to private funds. Harmonization of Exempt Offerings. Chairman Clayton had previously noted that the regulations around exempt offerings is a mess. The Division is considering recommending that the Commission seek public comment on ways to harmonize and…
These are some of the compliance-related stories that recently caught my attention. The Troika LaundromatThe Organized Crime and Corruption Reporting Project Laundromats are complex systems for moving money that allow corrupt politicians, organized crime figures, and wealthy business people to secretly invest their ill-gotten millions, launder money, evade taxes, and fulfill other goals.OCCRP has previously exposed three such schemes: The Proxy Platform, the Russian Laundromat, and the Azerbaijani Laundromat.Now, OCCRP and…
Actions by the Securities and Exchange Commission against real estate companies will catch my attention. A recent complaint against Robert Morgan and his affiliated real estate funds did just that. The SEC complaint is just charges, so we don’t know if the statements are true or what Morgan’s response will be. I’m just using it as a learning tool. The main charge against Morgan is a criminal complaint for mortgage fraud. In a Department…