Top SEC Releases and Vigilant Insights from 2023

Vigilant Insights

“For an Understanding of the Future, look at the Past”

As we start the first quarter of 2024, it is important to look back at 2023 for insights into how compliance is continuing to change.

The fiscal year 2023 saw Billions in financial penalties along with new rule proposals and adoptions.

Today, we will highlight some of the major SEC actions along with key Vigilant insights you may have missed.

Key Vigilant Insights

1. 18 Compliance Trends Discovered by Vigilant in 2023
   • 2023 was another busy and record setting year in compliance.
   • Multiple trends in the industry are noted and discussed.
2. Rule 2A-5 Valuation Rule – One Year Later
   • Vigilant President & CEO, Salvatore Faia, provided insights regarding the one-year anniversary of the Rule 2a-5 Valuation Rule with BoardIQ.
3. “On The Fly Compliance” Will No Longer Fly With Current Regulatory Environment
   • With one of the most aggressive regulatory climates in history, Firms that are unprepared will face significant headaches moving forward.
4. SEC AI Sweeps – Chuck Martin Quoted
   • Vigilant COO, Chuck Martin, was quoted in The Wall Street Journal discussing the motivations and implications of recent SEC Sweeps related to AI usage.
5. Best Practices for Keeping your RIA Compliant
   • We discuss five best practices and considerations for RIAs hoping to find compliance success in an aggressive regulatory environment.
6. Complying with the Marketing Rule 1 Year Later
   • 1 Year after the Marketing Rule is adopted, Vigilant Director, Thayne Gould, provided some key insights for successful Marketing Review Programs.
7. 8 Important Considerations for Dual-Hatted CCOs
   • It can be difficult acting in two different senior leadership positions; there are important compliance considerations based off our experience with Dual-Hatted CCOs.
8. Interval Fund Faces Valuation Issues
   • Vigilant Director, Fred Teufel, was quoted in an Ignites article discussing valuation issues that can affect certain Funds.
9. Mistakes to Avoid when Choosing a Compliance Partner
   • There are three important mistakes to avoid when partnering with a compliance Firm.
10. Reg BI may be a Major Source of Future Enforcement Action
    • We discuss 6 tips for staying compliant with Reg BI as regulatory activity related to the rule increases.

SEC Releases

1. SEC Adopts Private Fund Rules
   • The SEC announced the adoption of new rules for Private Funds and Private Fund Advisers. This new rule brings significant compliance changes and more details regarding those changes were covered by Vigilant.
2. 2024 SEC Division of Examinations Priorities
   • The SEC gave a detailed description of their goals and core risk areas as they continue to investigate Firms in 2024.
3. SEC Enforcement Results for FY 2023
   • Almost $5 billion in financial remedies.
   • 784 Enforcement Actions.
   • Almost $600 million in whistleblower awards.
4. SEC Adopts Amendments to Form PF
   • Large Hedge Fund Advisers must file current reports as soon as practicable when triggering events occur.
   • All Private Equity Fund Advisers will be required to file an event report for triggering events within 60 days of the fiscal quarter end.
   • Large Private Equity Fund Advisers will be required to report certain information on an annual basis.
5. 11 Firms Charged $289 Million for Recordkeeping Failures
   • Off-Channel Communications were not properly maintained or supervised.
   • With those enforcement actions, the SEC reached $1.5 Billion in penalties due to books and recordkeeping failures.
   • The SEC indicated at the time of this release that they will continue to hand out heavy fines until Firms show improvement in their internal policies and procedures.
6. SEC Adopts Fund Name Rule Amendments
   • Funds cannot have misleading or deceptive names.
   • Names that focus on thematic investment terms such as “value, income, growth, or ESG” will likely be the major focus when the effective date is reached.
7. SEC Increased Number of Examiners with Budget Increase
   • 83 additional full-time examiners to be hired if budget is approved.
   • 13% overall increase in full-time equivalent staff positions over the past two years.
   • Over 3,000 SEC exams were performed in 2022.

Vigilant’s Conclusion

This list contains important topics, insights, and reports for Firms trying to stay on top of the dynamic regulatory environment.

As an Award-Winning dedicated Compliance Firm, Vigilant continues to evaluate the current regulatory environment and provide the necessary insights for Firms to succeed.

Making an investment in Compliance by partnering with a seasoned Compliance Firm can be a cost-effective solution.

Schedule a call with the Vigilant Team today for any support you may need as we start this new year.  

Contact Us