Stradley Ronon Publishes Enforcement Client Alert

Stradley Ronon recently published a client alert titled “Asset Management Enforcement: Latest Trends and a Look Ahead at the New Commission.” The alert highlights areas the SEC Enforcement team focused on for Fiscal Year 2024 including off-channel communications, the marketing rule, affiliated transactions under the Investment Company Act, artificial intelligence (AI), and others. The alert noted that the Enforcement Division “brought a total of 583 enforcement actions in FY2024, a 26% decrease from FY2023 and a 26% decrease from the average of all four years of Clayton’s term.”

In the AI space, the Enforcement Division settled two separate charges with investment firms that allegedly made “materially false and misleading statements relating to their use of artificial intelligence (AI).” In these cases, both firms claimed to be utilizing AI as part of the investment process and were not.

Regarding affiliated transactions, the Commission brought an action against a firm that used their securities lending business to “secure a loan to finance the settlement of private litigation without which the respondents risked certain bankruptcy.” Outside of another 17d-1 case brought in 2023, a case brought under Rule 17d-1 had not occurred since 2008.

Click here to read the Stradley Enforcement client alert.