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The SEC’s Focus on Cybersecurity: Key considerations for investment advisers

September 9, 2014 Comments off

The SEC’s Focus on Cybersecurity: Key considerations for investment advisers
Source: Deloitte

The growing number and complexity of cybersecurity risks facing investment advisers (IAs) has triggered an increased interest in cyber risk management by the United States Securities and Exchange Commission (SEC). Cyber risks and the SEC’s related focus are particularly relevant for mutual funds, hedge funds, and private equity managers.

In this point of view, we outline key considerations arising from the cybersecurity Risk Alert issued by the SEC’s Office of Compliance Inspections and Examinations (OCIE) and describe how IAs can prepare for an OCIE cybersecurity examination and leading practices for IAs to utilize when addressing cybersecurity threats.

Deloitte expects the SEC and its staff to continue to focus on cybersecurity, particularly as the results of a planned sweep of fifty cybersecurity exams unfold. It is critical that IAs not only meet SEC expectations in the cybersecurity arena, but also invest in a program to become secure, vigilant, and resilient in the face of cybersecurity risks.

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SEC Warns Investors About Marijuana-Related Investments Amid Recent Trading Suspensions

May 16, 2014 Comments off

SEC Warns Investors About Marijuana-Related Investments Amid Recent Trading Suspensions
Source: U.S. Securities and Exchange Commission

The Securities and Exchange Commission today cautioned investors about the potential for fraud in microcap companies that claim their operations relate to the marijuana industry after the agency suspended trading in the fifth such company within the past two months.

The SEC issued an investor alert warning about possible scams involving marijuana-related investments, noting that fraudsters often exploit the latest growth industry to lure investors with the promise of high returns. “For marijuana-related companies that are not required to report with the SEC, investors may have limited information about the company’s management, products, services, and finances,” the SEC’s alert says. “When publicly available information is scarce, fraudsters can more easily spread false information about a company, making profits for themselves while creating losses for unsuspecting investors.”

Spearheaded by its Microcap Fraud Task Force, the SEC Enforcement Division scours the microcap market and proactively identifies companies with publicly disseminated information that appears inadequate or potentially inaccurate. The SEC has the authority to issue trading suspensions against such companies while the questionable activity is further investigated.

New From the GAO

April 17, 2014 Comments off

New GAO Report
Source: Government Accountability Office

Information Security: SEC Needs to Improve Controls over Financial Systems and Data. GAO-14-419, April 17.
http://www.gao.gov/products/GAO-14-419
Highlights – http://www.gao.gov/assets/670/662614.pdf

SEC — Staff Analysis of Data and Academic Literature Related to Money Market Fund Reform

March 25, 2014 Comments off

Staff Analysis of Data and Academic Literature Related to Money Market Fund Reform
Source: U.S. Securities and Exchange Commission

The staff of the Securities and Exchange Commission today made available certain analyses of data and academic literature related to money market fund reform.
The analyses, which were conducted by the staff of the SEC’s Division of Economic and Risk Analysis, are available for review and comment on the Commission’s website as part of the comment file for rule amendments proposed by the SEC in June 2013 regarding money market fund reform.

The analyses examine:

  • The spread between same-day buy and sell transaction prices for certain corporate bonds from Jan. 2, 2008 to Jan. 31, 2009.
  • The extent of government money market fund exposure to non-government securities.
  • Academic literature reviewing recent evidence on the availability of “safe assets” in the U.S. and global economies.
  • The extent various types of money market funds are holding in their portfolios guarantees and demand features from a single institution.

SEC — Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio

March 14, 2014 Comments off

Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio (PDF)
Source: U.S. Security and Exchange Commission

As with anything you buy, there are fees and costs associated with investment products and services.

These fees may seem small, but over time they can have a major impact on your investment portfolio. The following chart shows an investment portfolio with a 4% annual return over 20 years when the investment either has an ongoing fee of 0.25%, 0.50% or 1%. Notice how the fees affect the investment portfolio over 20 years.

SEC — Investor Bulletin: Variable Annuities—An Introduction

March 10, 2014 Comments off

Investor Bulletin: Variable Annuities—An Introduction (PDF)
Source: U.S. Securities and Exchange Commission

A variable annuity is an investment product with insurance features. It allows you to select from a menu of investment choices, typically mutual funds, within the variable annuity and, at a later date—such as retirement—allows you to receive a stream of payments over time. The value of your variable annuity will depend on how your investment choices perform.

See also: Variable Annuities: What You Should Know

SEC Comment Letters — Including Industry Insights: Constructing Clear Disclosures

December 9, 2013 Comments off

SEC Comment Letters — Including Industry Insights: Constructing Clear Disclosures
Source: Deloitte

This new release in the Deloitte (United States) SEC Comment Letter series includes extracts of frequently issued SEC staff comments, additional analysis, and links to resources that are relevant to SEC filers. The seventh edition features:

  • New and updated analysis of comments related to MD&A, risk factors, and financial statement accounting and disclosures, including:
  • Quantification and analysis of factors causing changes in registrants’ results of operations.
  • Liquidity risks and restrictions on a registrant’s ability to transfer cash or pay dividends.
  • Cybersecurity risks, disclosures pertaining to sponsors of state terrorism, and non-GAAP financial measures.
  • Disclosures related to unobservable inputs in Level 3 fair value measurements.
  • Revenue recognition disclosures, including those about multiple-element arrangements.
  • Segment reporting, particularly if operating segments are aggregated.

Added coverage of comment trends regarding emerging growth companies and initial public offerings.

Expanded discussions of industries covered in the sixth edition, including retail; travel, hospitality, and leisure; energy and resources; financial services; health sciences; technology; and telecommunications.

Appendixes offering insights into current standard setting, the SEC staff’s review and comment letter process, best practices for managing and resolving SEC comment letters, and helpful tips on searching the SEC’s comment letter database.

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