In this issue, we cover regulatory developments impacting the investment management sector, including proposed legislation supported by the Investment Company Institute to address.
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FINRA Enforcement has often been accused (again, admittedly, by me, and not too infrequently) of going after the “low-hanging fruit,” that is, taking the easy case when it presents itself. Putting aside the question whether this observation is accurate or not – for what it’s worth, I think the answer is that it is often, but not always, true – a recent case triggers a better, more nuanced question: does FINRA Enforcement sometimes bring the
wrong case, because it is easier?
Here is what made me think of this: a series of cases concerning a mutual fund called the LJM Preservation & Growth Fund (the “LJM Fund”). You probably recall hearing about it. The LJM Fund was a so-called “alternative” mutual fund. Here is how FINRA defines that: