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Big day for compliance stories

Update on the case against NYPPEX chief Laurence Allen; the SEC doesn’t require encryption of central documents, but, if you do…; investment adviser gets registration revoked; tech opportunities for CFOs

Allen update: A quick update on the fraud case against Laurence Allen of NYPPEX, plus a key claim made by the Office of the New York State Attorney General, regarding how Allen’s lawyer plans to begin his defense. That should be followed very soon with my brief(ish) rundown of the other major claims. There are many, but for you audit/accounting/compliance fanatics, the meat is in how Allen allegedly dealt with auditors, fair value evaluations and LPA amendments regarding carried interest and clawbacks.

Deciphering encryption use: Sister publication RCW has this article, published on our site, about the use of encryption for sensitive documents. One of the key takeaways: the SEC doesn’t require firms to encrypt them, but if you do, it is also not advisable to promise that you will encrypt them in advisory contracts.

Waterfalls and Excel: From our special supplement on carry, waterfall and incentives, an article from sponsor EWM Global makes the case for taking advantage of technology to future-proof your firm’s waterfall calculation system.

IA registration revoked: Elsewhere in the fraud world, RCW reports that the SEC has revoked International Investment Group’s registration as an investment advisor, after accusing it of selling $60 million in fake loan assets to hide losses in its ‘flagship’ hedge fund. On a slight side note, but possibly of interest to those whose firms invest in collateralized loan obligations, part of the SEC’s claims was that the firm raised a CLO, then directed it to buy loans out of its troubled fund and sold the bonds to investors. But the proceeds from the loan sales to the CLO weren’t enough to satisfy the fund’s liquidity needs. Of course, transfers and cover-up transactions ensued. But, as far as I know, it’s the second recent claim of asset-level fraud in the CLO industry. The other involves allegedly fake loan assets and forged documents, including one bearing the signature of Santander’s CFO.

Email prepared by Graham Bippart