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The SEC charged three AXA Rosenberg entities with securities fraud for concealing a significant error in the computer code of the quantitative investment model that they use to manage client assets. The error caused $217 million in investor losses. AXA Rosenberg Group LLC, AXA Rosenberg Investment Management LLC, and Barr Rosenberg Research Center LLC have agreed to settle the SEC's charges by paying $217 million to harmed clients plus a $25 million penalty, and hiring an independent consultant with expertise in quantitative investment techniques who will review disclosures and enhance the

SEC Release No. IA-3175 March 14, 2011 The SEC published a settled administrative action against an investment advisor relating to (1) the firm's failure to disclose to advisory clients certain financial benefits that its affiliated broker-dealer received; (2) the firm's failure to provide prior written disclosure to clients that it would engage in fixed income transactions on a riskless principal basis ( i.e. rather than as agent); and (3) for failing to adopt and implement policies and procedures designed to prevent violations of the Advisers Act and for failing to maintain and enforce a

SEC Release No. 34-64442 / IA-3197 May 9, 2011 The SEC announced a settled civil administrative action against a California-based investment adviser and two of its principals for violations that included (i) failing to disclose certain requested information regarding prior SEC examinations; (ii) failing to implement appropriate policies and procedures; (iii) failing to have an annual surprise examination of the adviser's hedge funds and to provide the hedge fund investors with quarterly account statements and timely annual audit reports; and (iv) failing to keep employee acknowledgments of

The SEC issued a staff report intended to help broker-dealers safeguard confidential information from insider trading and other forms of misuse. The report -- issued by their Office of Compliance Inspections and Examinations (OCIE) -- describes strengths and weaknesses identified in examinations into how broker-dealers keep material nonpublic information from being misused. Lofchie Comment: All firms that receive inside information must review this report carefully. It contains a very full discussion of the various ways that broker-dealers may receive inside information and the steps that they

The NFA issued an updated version of its Self-Examination Questionnaire that NFA member firms, including FCMs, IBs, CPOs and CTAs, are required to complete on an annual basis. The Self-Examination Questionnaire includes a general questionnaire that must be completed by all NFA member firms and supplemental questionnaires tailored to the business activities of the various categories of NFA members (FCMs, FDMs, IBs, CPOs and CTAs). The Self-Examination Questionnaire is intended to assist NFA member firms in recognizing potential problem areas, and to alert firms to procedures that need to be