Enforcements

SEC Takes Aim at Bogus ADV Filings in Sweep of Sham Advisers

Summary: The SEC charged six purported investment advisers for making materially false statements in their Form ADV filings—including fictitious U.S. office locations, inflated assets under management, fabricated associations with other advisers, and claims of advising private funds that appear not to exist. The firms allegedly failed to respond to SEC information requests and, in several cases, did not appear to have any genuine advisory operations.

Why it matters: The action underscores the SEC’s intensifying focus on the accuracy and verifiability of Form ADV disclosures. The Commission highlighted the use of data analytics to identify red flags such as impossible AUM levels, nonexistent office locations, and private funds no other adviser reports. This enforcement adds further weight to the Division of Examinations’ 2026 priorities, which emphasize the integrity of regulatory filings for RIAs and private fund managers.

Potential action: Advisers should conduct a line-by-line verification of Form ADV disclosures, ensuring all operational details—AUM, office locations, fund structures, affiliations, client counts, and ownership—can be substantiated with documentation. Private fund managers should confirm that fund identities match filings across all related entities. Firms must also be prepared to promptly respond to SEC record requests and maintain strong governance around regulatory filings.

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CFTC Issues $51M Penalty in Metals Fraud Case

Summary: The CFTC and 30 state regulators obtained a final judgment exceeding $51 million against Safeguard Metals LLC and its principal for misleading more than 450 investors, many elderly, into purchasing precious metals at steep, undisclosed markups. The court ordered restitution and civil penalties following findings of deceptive marketing and inflated pricing.

Why it matters: The case highlights regulators continued focus on fraud involving alternative or hard-asset investments, especially where sales practices target vulnerable investors. Pricing transparency, markups, and suitability remain high-risk areas for firms offering commodity- or metal-related products.

Potential action: Firms offering commodities, metals, or physical-asset strategies should review disclosures, pricing practices, and suitability documentation to ensure they are transparent, accurate, and defensible.

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SEC Wins $27.5M in Valuation Fraud Case

Summary: The SEC secured final judgments totaling more than $27.5 million against Bluepoint Investment Counsel, Greenpoint Asset Management, Chrysalis Financial, and their principals after a jury found they fraudulently inflated valuations in the Greenpoint Tactical Income Fund’s illiquid portfolio. The court-imposed disgorgement, prejudgment interest, significant civil penalties, and permanent injunctions.

Why it matters: This case reinforces the SEC’s aggressive stance on valuation practices in private funds, especially where inflated marks drive advisory fees. Illiquid and hard-to-value assets remain a core enforcement focus, and affiliated entities and individuals can be held jointly liable when valuation governance breaks down.

Potential action: Managers should reassess valuation controls for Level 3 assets, ensure assumptions and overrides are well-documented, confirm fee calculations reflect defensible marks, and verify offering documents accurately describe valuation methodologies and conflicts.

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Rulemaking

The New Reg S-P Era Is Here—Firms Must Act Now

Summary: The U.S. Securities and Exchange Commission (“SEC”) amended Regulation S‑P to significantly expand safeguarding, incident-response, vendor-oversight, customer-notification, and record-keeping obligations for “covered institutions,” including registered investment advisers with ≥ $1.5 billion in assets under management. The compliance deadline for these advisers is December 3, 2025, with smaller covered entities required to comply by June 3, 2026.

Why it matters: Advisers and fund managers subject to the larger-entity threshold cannot delay readiness—the regulation imposes non-discretionary requirements on incident plans, service-provider oversight, and timely customer notifications in the event of a breach. As regulators increasingly target data-security and vendor-risk programs, non-compliance could trigger examinations, enforcement or reputational damage.

Potential action: Visit our website now to review the full summary and ensure your firm has: a documented and tested incident-response plan, updated vendor agreements reflecting new oversight and notification obligations, and a comprehensive review of your privacy and safeguarding controls. Time is tight—if your program isn’t finalized, act now.

Read More Here(Orical)

In the news

DOJ Warns Private-Credit Managers Over “Sketchy” Valuation Marks

Summary: Bloomberg reports that Jay Clayton, now leading the DOJ’s Manhattan office, has warned private-credit and private-equity managers that prosecutors are scrutinizing wide divergences in valuation marks across firms. Regulators and academics note that inconsistent pricing of similar assets is becoming a red flag for potential manipulation.

Why it matters: This signals a shift from purely regulatory concern to criminal-enforcement interest in private-market valuations. Private credit marks that appear overly optimistic, particularly when tied to fees or capital-raising—may face far deeper scrutiny from both the DOJ and SEC.

Potential action: Managers should benchmark valuations across comparable assets, reinforce valuation-committee challenge and documentation, and confirm investor disclosures accurately reflect how marks are determined. Robust, supportable valuation files will be essential if regulators question discrepancies.

Read More Here(Bloomberg)

Private Equity’s Retail Rush Raises Big-Investor Red Flags

Summary: The Wall Street Journal reports that private-equity firms are rapidly expanding into the retail and high-net-worth market through evergreen and semi-liquid vehicles, drawing in hundreds of billions in new capital. Longtime institutional investors warn that this shift is changing the industry’s dynamics, intensifying competition for deals, pressuring returns, and altering traditional alignment between managers and large LPs.

Why it matters: As more managers launch retail-facing or semi-liquid products, the structural balance between institutional and individual investors is shifting. This trend introduces new liquidity, valuation, governance, and conflict-management challenges that advisers must navigate carefully, especially as institutional LPs reevaluate terms and allocation priorities.

Potential action: Managers considering or already offering retail-oriented vehicles, should reassess their investor-mix disclosures, allocation practices, liquidity frameworks, and governance controls to ensure they remain defensible and aligned with both institutional and individual investors.

Read More Here(WSJ)

SEC Public-Company Enforcement Falls 30%

Summary: Enforcement actions brought by the U.S. Securities and Exchange Commission (SEC) against public companies and their subsidiaries decreased by approximately 30 % in fiscal year 2025 compared to fiscal year 2024. The report shows that 93 % of those actions were filed before the change in SEC leadership, and settlement amounts to their lowest level in years.

Why it matters: For investment advisers and funds, the drop in enforcement actions in the public-company space may reflect a broader shift in SEC priorities and resources. While the reduction is focused on public companies, the change suggests that advisers and private-fund managers should evaluate whether emergent enforcement risks are migrating into new rather than being reduced overall.

Potential action: Firms should review their compliance posture against emerging areas of SEC focus rather than assuming enforcement risk is declining. It may be prudent to revisit historical enforcement data, reassess how your business lines map to enforcement trends, and ensure your policies and disclosures reflect the latest regulatory environment.

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Glass Lewis Considers SEC Registration

Summary: Reuters reports that Glass Lewis is considering registering as an investment adviser with the SEC—returning to a regulatory framework it exited in 2005. The move appears aimed at addressing criticism over the transparency and influence of proxy-advisory firms.

Why it matters: For investment managers, adviser registration would bring greater regulatory oversight to a firm whose recommendations directly affect governance and voting outcomes. This could reshape expectations around methodology, conflicts, and how advisers rely on proxy-advisory input.

Potential action: Managers should review their proxy-voting processes and disclosures, ensure they understand how third-party recommendations are incorporated, and monitor whether increased scrutiny prompts changes in oversight or exam focus.

Read More Here (Reuters)

Events

RIA Edge Private Markets

Summary: This one-day conference is designed for senior RIAs and invites asset managers to meet decision-makers in private markets. Attendees will explore alternative strategies across private credit, real estate, equity and debt, with focused panels in the morning and curated small‐group meetings in the afternoon.

Why it matters: As private-fund managers and advisors look to broaden their investor base and expand into RIA channels, this event offers valuable insight into how RIAs are thinking about private-markets allocations, manager selection and product structures. Keeping up with how RIAs evaluate alternatives helps compliance/legal teams anticipate due-diligence expectations, marketing shifts and investor-engagement models.

Potential action: Consider attending to network with RIAs and alternative-asset managers, understand what RIAs are demanding in terms of structure, liquidity and disclosure, and gather competitive intelligence on how managers presenting to RIA channels are structuring access, fees and reporting.

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Orical Publications

Orical’s latest publication, FY2026 Examination Priorities - Issue in Focus examines the SEC’s newly released exam priorities, which signal a sharpened regulatory lens on cybersecurity, fiduciary duty, conflicts of interest, and the expanding use of AI-driven tools across advisory firms. While the themes align with long-standing expectations, the SEC’s framing reflects a clear shift toward deeper, more risk-targeted reviews, particularly for newly registered advisers and firms navigating operational growth. Advisers should ensure their compliance programs are fully implemented, well-equipped, and prepared to withstand heightened scrutiny in the year ahead.

Read More Here (Orical)