Disclosure is dead; long live disclosure

As the Securities and Exchange Commission (SEC) wraps up its 2014 fiscal year and people look back over some of its significant enforcement actions from the last year, one clear touchstone is the focus on disclosures to clients and investors: failures to disclose, inadequate disclosure, and insufficient disclosure. This article looks at a few selected cases from the past year and provides some practical pointers for re-examining and strengthening disclosures to clients and investors. In one case the SEC initiated earlier this year -- but has not yet settled -- the SEC alleged that a private equity fund manager had failed to properly disclose information regarding expense reimbursement borne by its fund clients. In a settled case earlier this year, the SEC alleged that an investment adviser engaged in a number of principal transactions between advisory client accounts and a proprietary trading account at a broker-dealer under common control with the adviser.