A federal district court in Missouri recently enjoined Missouri Securities Division rules that require financial firms and professionals to obtain clients’ signatures on state-prescribed documents before providing advice that “incorporates a social or nonfinancial objective.” The permanent injunction issued in Securities Industry and Financial Markets Association v. Ashcroft, No. 23-cv-4154 (W.D. Mo. Aug. 14, 2024), vindicates a noteworthy response from the securities industry to the anti-ESG backlash that has emerged in some states in the past few years and has politicized investment decisionmaking.
investment advisors
SEC Once Again Sanctions The CCO of An Investment Advisory Firm
By Harry Frischer & Philip Arnold on
On November 19, 2015, the SEC announced a settlement with investment advisory firm Sands Brothers Asset Management, LLC for violating the Custody Rule, SEC Rule 206(4)-2, which requires that registered investment advisers who have custody of their clients’ assets put in place policies and procedures intended to safeguard those assets against loss, misuse or misappropriation. The SEC also imposed sanctions on Sands Brothers’ Chief Compliance Officer who was subjected to a one-year suspension and a fine for aiding and abetting these violations.
Pay-to-Play Rule: SEC Announces Compliance Date for Ban on Third-Party Solicitation of Government Entities
Last month, the Securities and Exchange Commission (SEC) set a compliance date of July 31, 2015 for the ban on payments to third parties for the solicitation of advisory business from any government entity under Rule 206(4)-5 of the Investment Advisers Act of 1940 (Pay-to-Play Rule). At the same time, the SEC also clarified in its Frequently Asked Questions (FAQ) on the Pay-to-Play Rule that it would not recommend enforcement action against an investment adviser or its covered associates under the Pay-to-Play Rule for payments to third-party solicitors until the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB) have adopted equivalent pay-to-play rules for broker-dealers and municipal advisers, respectively.