Thursday, November 17, 2011

SEC Cracking Down on Tarted-Up ADVs

This catchy headline is from Apparently the Commission has started targeting investment advisers who have lied on their registration forms. The SEC is quoted as saying that it has begun reviewing registration documents to find advisers who have not accurately portrayed their education, assets under management and other aspects of their firm.

According to the Commission, the goal is to stop larger frauds - the director of enforcement is quoted as saying '“If they come face to face with inspectors early on … they're going to know that we're watching, and they're going to be unlikely to graduate to larger frauds.”

Can the Commission really be this naive? Checking Form ADV for lies is going to prevent significant securities fraud? I am pretty sure that those who are committing fraud are not lying in any obvious way on Form ADV, and they are certainly aware that the Commission is "watching," to the extent that the Commission is watching at all.

Liars clubbed? SEC cracking down on tarted-up ADVs

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