Before you go racing off into the weekend I wanted to share a few things that happened this week to keep you up to date with all things SEC and compliance and the happenings in the My RIA Lawyer office.?
Our Friday updates are designed to give you an overview of what is going on in the finance world and how this could affect your business.
- THIS IS A WARNING TO GET ON TOP OF YOUR RECORD KEEPING PROCEDURES! The SEC has announced charges against 26 broker-dealers, investment advisers, and dually-registered broker-dealers and investment advisers for widespread and longstanding failures by the firms and their personnel to maintain and preserve electronic communications. The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined civil penalties of $392.75 million, and have begun implementing improvements to their compliance policies and procedures to address these violations. Three of the firms, as noted below, self-reported their violations and, as a result, will pay significantly lower civil penalties. Each of the SEC’s investigations uncovered pervasive and longstanding use of unapproved communication methods, known as off-channel communications, at these firms. Are you staff using off-channel methods to communicate with clients? If so then now is the time to get on top of it because fines are only getting bigger and bigger. You can read the full details of these charges HERE.?
- The SEC has obtained a preliminary injunction, asset freeze, and other emergency relief against Atlanta-based Drive Planning LLC and its founder and CEO, Russell Todd Burkhalter, to halt a $300 million real estate Ponzi scheme impacting more than 2,000 investors. The SEC’s complaint alleges that, from 2020 through at least June 2024, Drive Planning and Burkhalter raised more than $300 million for purported real estate investments, telling investors their money would be used to fund land development projects. The defendants promised 10% interest every 3 months and encouraged investors to tap their savings, retirement accounts, and even open lines of credit to invest. In reality, the defendants did not have a business capable of generating the promised returns, and they instead used investor funds to make Ponzi-like payments, according to the complaint. A receiver was appointed over Drive Planning. The SEC alleges the defendants misappropriated millions of dollars of investor funds to fund Burkhalter’s lavish lifestyle and to make Ponzi-like payments.You
can read more about this scheme and the SEC’s charges HERE.
?
- The SEC has announced charges against Carl C. Icahn and his publicly traded company, Icahn Enterprises L.P. (IEP), for failing to disclose information relating to Icahn’s pledges of IEP securities as collateral to secure personal margin loans worth billions of dollars under agreements with various lenders. According to the SEC’s orders, from at least December 31, 2018, through the present, Icahn, who is IEP’s controlling shareholder and Chairman of the board of directors of IEP’s general partner, pledged approximately 51 to 82 percent of IEP’s outstanding securities as collateral to secure personal margin loans worth billions of dollars under agreements with various lenders. Notwithstanding Icahn’s various margin loan agreements and amendments, IEP failed to disclose Icahn’s pledges of IEP securities as required in its Form 10K until February 25, 2022. Icahn also failed to file amendments to Schedule 13D describing his personal margin loan agreements and amendments, which dated back to at least 2005, and failed to attach required guarantee agreements. Icahn’s failure to file the required amendments to Schedule 13D persisted until at least July 9, 2023. IEP and Icahn agreed to pay $1.5 million and $500,000 in civil penalties, respectively, to settle the SEC’s charges. This is a reminder to stay up to date on all necessary disclosures so that you aren’t slapped with millions to pay in fines. Read more about this particular case HERE.
?
2 Things that happened in My RIA Lawyer office!
- We are looking for top talent as My RIA Lawyer continues to grow! Who would fit right in with the My RIA Lawyer team? You are:?
?holds yourself to a high standards and are constantly growing and learning
?someone who likes to understand how they fit within the big picture
?achievement and goal oriented
?diligent and have an eye for detail
?someone who loves seeing the impact your work has on your clients
If this sounds like you then you can find more information on our careers page here: https://www.myrialawyer.com/careers/
. Or send your resume through to [email protected]
. We can’t wait to hear from you.?
- The end of the year is approaching fast, and we want to make sure that you aren’t caught out in October when the SEC announces the next round of annual examinations. So it’s time to… Audit your compliance program. While things are a little quieter with both you clients and your team taking a break across the summer, now is the time to get all these behind the scenes items sorted. Not sure where to start? Well our risk calculator can help highlight some areas that might need work. For your first step, complete the risk calculator by going HERE.?
The FTC’s ban on non-competes has effectively been struck down this week as a judge in Texas barred the rule from taking effect. This means that the rule has been set aside and will not come into effect on September 4th as was originally planned. However, this does not mean that you should be complacent with your current contracts. If anything this serves as a reminder to make sure that your current contracts have been reviewed and kept up to date, whether they are employee or client contracts. If you need contract advice, our compliance attorneys are here anytime you need them as part of our CCO On-Call services. Send us a message if you’d like to find out more about this subscription legal access that gives you access to a compliance attorney every month of the year.?
