Recent SEC Enforcement Actions Highlight the Importance of Sound Valuation and Disclosure Practices by Investment Managers (July 2020)
Client Briefings
Introduction
Share
The U.S. Securities and Exchange Commission recently obtained a final judgment of over $30 million against a registered investment adviser for inaccurate disclosures based on its use of false and misleading track record information in violation of the Investment Advisers Act of 1940. The action against Navellier & Associates, Inc. followed two prior enforcement actions against registered investment advisers—Old Ironsides Energy, LLC and Everest Capital LLC—for private fund marketing disclosure violations. In addition, a recent Risk Alert by the SEC's Office of Compliance Inspections and Examinations identified inaccurate valuations as a recurrent finding in OCIE private fund adviser examinations. These recent developments underscore the SEC's continued focus on ensuring that investment managers accurately value portfolio holdings and clearly and accurately disclose fund and manager performance—requirements that are increasingly challenging since the outbreak of COVID-19.
