More On Legal & Compliancefrom The Advisor's Professional Library
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
Evergreen Investment Management Co. agreed to a $25 million settlement with an institutional investor earlier this week, according to a Reuters report. The settlement concerned the Evergreen Ultra Short Opportunities Fund, which had exposure to mortgage-backed securities, the plaintiff maintained.
The now-defunct fund was operated by Evergreen Investment Management Co., the investment management business of Wachovia, currently part of Wells Fargo (WFC).
“This consolidated securities class action focuses on actions of individuals associated with a Wachovia business unit (Evergreen) during a time period that predates Wells Fargo’s acquisition of Wachovia,” Wells Fargo said in a statement that was shared with AdvisorOne on Friday.
“The Wells Fargo Funds Management Group has a long history of focusing on corporate governance and adhering to all compliance and regulatory requirements. The Fund Management Group’s policies and procedures, and conservative approach to risk management, has led the firm to successfully avoid the regulatory challenges experienced by many firms in the mutual fund industry,” the bank added.
The fund was reportedly liquidated by Evergreen in June 2008, when it was worth about $400 million. When investors sued, they said their loss was about 25%.
Lawyers for the plaintiffs estimated the recoverable damages at $97 million, according to Reuters. This figure does not include $33 million that was part of an earlier SEC settlement of 2009 totaling $40 million.
"We are particularly pleased to be able to recover on behalf of our institutional investor clients who ultimately were cheated of millions of dollars as a result of the blatant misrepresentations made by the defendants," said Stewart Cohen, a lawyer for the plaintiffs, said in a statement given to Reuters.