Chicago partner Jim Lundy is quoted in an InvestmentNews article titled “Critics Concerned with Pending Second Wave of SEC Share-Class Crackdown,” which discusses the SEC’s ongoing efforts regarding its Share Class Selection Disclosure Initiative (SCSD Initiative) and other efforts of the Division of Enforcement’s Asset Management specialty unit. The article also includes a constructive discussion with a former SEC Commissioner.
After settlements with 79 firms for a total of $125 million for the first wave of the SCSD Initiative actions, the SEC is poised to file the second wave of actions. The Asset Management Unit has also since opened investigations into certain firms who elected not to self-report and has started to aggressively investigate revenue sharing disclosures and conflicts of interest across the industry. In the midst of all of this, the U.S. Court of Appeals for the D.C. Circuit issued an opinion in the case of The Robare Group, Ltd. v. SEC that has impacted these SEC efforts.
Jim noted that as a result of the D.C. Circuit’s Robare opinion that the court’s holding regarding “willfulness” likely impacted the second wave of SCSD Initiative settlements, “That aspect of the ruling slowed down this second wave.” However, now that the SEC has apparently fully considered the impacts of this opinion he expects the SEC’s efforts regarding this second wave and other efforts “to ramp back up again.”