The SEC Office of Compliance Inspections and Examinations ("OCIE") issued a Risk Alert on the due diligence processes that investment advisers use when recommending or placing clients' assets in alternative investments such as hedge funds, private equity funds or funds of private funds. The alert describes current industry trends and practices in advisers' due diligence. Comparing these to trends and practices from previous periods, the staff noted that advisers are: seeking more information and data directly from the managers of alternative investments; using third parties to supplement and

The Senate Banking Committee, Subcommittee on Economic Policy, held a hearing, titled "The Annual Report and Oversight of the Office of Financial Research ("OFR")," to discuss the 2013 OFR Annual Report and its evaluation of the state of the U.S. financial system, as well as the September 2013 Asset Management and Financial Stability Report. Lofchie Comment: Since its release, the Asset Management and Financial Stability Report has drawn substantial criticism from market participants and lawmakers who found the report misleading. One example, which is indicative of a general misunderstanding

The SEC charged a money manager and his firm with making false claims through Twitter, newsletters and other communications. According to the SEC order, Mark A. Grimaldi, the majority owner, president and chief compliance officer at Navigator Money Management ("NMM"), selectively touted the past performance of the Sector Rotation Fund and specific securities recommendations made to clients. In particular, Grimaldi used a newsletter called The Money Navigator, which had over 60,000 subscribers, to solicit clients for NMM and investors for the Sector Rotation Fund. The SEC order details several

The National Futures Association ("NFA") issued a notice clarifying that its request for comments about whether to impose capital requirements on CPO and CTA Members, and about other customer protection measures, is not limited to responses from CPO and CTA Members but open to public comment. See: NFA Notice I-14-05. Related news: NFA Requests Comments Regarding CPO/CTA Capital Requirement and Customer Protection Measures (with Lofchie Comment) (January 23, 2014).

The International Organization of Securities Commissions ("IOSCO") published a final report, "Recommendation Regarding the Protection of Client Assets," which provides regulators with recommendations on the protection of client assets at regulated intermediaries, as well as a survey of the client protection regimes of 20 worldwide jurisdictions. The survey includes client protection regimes from Australia, Brazil, Canada, France, Germany, Hong Kong, India, Italy, Japan, Korea, Mexico, the Netherlands, Pakistan, Poland, Romania, Singapore, Spain, Turkey, the United Kingdom, and the CFTC and SEC