Enforcement

SEC Final Judgment Against Private Fund Manager in Alleged Offering Fraud

Summary: The SEC reported a final judgment against an Alabama private fund manager tied to alleged offering-fraud claims involving a private investment fund that raised capital from retail investors based on allegedly false claims (including purported regulation status, AUM, strategy testing, and “no risk of loss” representations).

Why it matters: This is a familiar enforcement pattern for private funds: “institutional sounding” representations, inflated operational claims, and unrealistic performance/risk statements. It’s a reminder that investor communications and offering materials need to be supportable, consistently applied, and backed by documentation.

Potential action items: Private fund managers should pressure-test offering decks, DDQs, pitchbooks, and risk disclosures for any statements about AUM, regulation, testing history, strategy mechanics, and risk framing that can’t be substantiated. Firms should also confirm who approves marketing language and how claims are archived for exam defensibility.

Read More Here(SEC)

SEC Charges Canadian Citizen in $18M Discord-Based Fraud Scheme

Summary: The SEC charged Canadian citizen Nathan Gauvin and three related entities with running fraudulent investment schemes that raised more than $18 million from retail investors, many of whom were solicited through Discord. The SEC alleges Gauvin fabricated fund performance, assets, and credentials, and misappropriated over $6 million for personal use, while also promoting a sham “seed stock” investment.

Why it matters: The case highlights the SEC’s heightened focus on social-media–driven fraud and the ease with which bad actors can target retail investors through online communities. It reinforces that misrepresentations about credentials, AUM, and performance—even on informal platforms—remain a clear enforcement trigger.

Potential action: Firms should strengthen surveillance around digital-platform promotions, remind investors to verify credentials through official channels, and ensure internal policies address emerging solicitation risks across Discord and similar platforms.

Read More Here (SEC)

What regulators are saying

SEC Highlights Ongoing Gaps in Marketing Rule Compliance

Summary: The SEC’s Division of Examinations issued a Risk Alert outlining additional deficiencies observed in advisers’ compliance with the Marketing Rule, with a focus on testimonials and endorsements and advisers’ use of third-party ratings. Examiners reported ongoing issues with required disclosures, oversight of promoters, and documentation supporting ratings.

Why it matters: The Alert reinforces that marketing remains a frontline exam priority and that the SEC is tightening scrutiny on high-risk areas where advisers continue to fall short. Firms using testimonials, influencers, or ratings platforms face increased risk of exam findings if disclosures, agreements, or due-diligence steps are incomplete.

Potential action: Advisers should review marketing materials and approval workflows, confirm that testimonials/endorsements and third-party ratings meet all disclosure and oversight requirements, and update policies, procedures, and training to reflect the SEC’s latest observations.

Read More Here (SEC)

Rulemaking

CFTC Overhauls Investigations Rules to Enhance Fairness

Summary: The CFTC adopted amendments to its Rules Relating to Investigations and Rules of Practice aimed at improving transparency and fairness in its enforcement process. Key updates include requiring Wells notices to be provided (or confirmed) in writing, expanding the required detail regarding potential charges and supporting evidence, and extending the Wells response deadline to at least 30 days (up from 14). The agency also strengthened the standards for internal enforcement memoranda, requiring clearer factual support and citations.

Why it matters: The revisions align the CFTC more closely with recent procedural reforms at other federal regulators and signal a broader push for greater due process in enforcement matters. Firms and individuals facing CFTC inquiries can expect clearer notice of allegations and more time to respond—while also seeing a more formal and documented decision-making process inside the agency.

Potential action: Firms should update enforcement-response protocols to reflect longer Wells timelines, ensure teams understand the new documentation and notice requirements, and adjust internal playbooks for managing CFTC inquiries and settlement discussions.

Read More Here (NYU)

EDGAR Next: “Last-Mile” Enrollment Countdown for Filers

Summary: SEC filer-support materials reiterate that EDGAR Next enrollment ends at 10 p.m. ET on December 19, 2025, and filters who haven’t enrolled can lose EDGAR access (and the ability to file) unless they reapply via Form ID and are granted access.

Why it matters: Advisers and fund complexes that make filings directly (or rely on internal processes before outsourcing to a filing agent) can face operational disruption if EDGAR access lapses—especially around time-sensitive filings, amendments, or launch-related submissions.

Potential action items: Confirm enrollment status across all relevant filers and affiliates, verify login.gov credentials/MFA, confirm current CCC/passphrase, and document who internally controls EDGAR access governance going forward.

Read More Here(SEC)

In the news

White House Moves to Rein in State AI Laws and Push Federal Framework

Summary: The White House issued an Executive Order on December 11, 2025, directing federal agencies to push back against “onerous” state AI laws and advance a unified national framework. The EO instructs DOJ to form an AI Litigation Task Force to challenge conflicting state statutes, requires the Commerce Department to identify state laws that may be overly burdensome, and encourages tying certain federal funds to states’ willingness to limit conflicting AI requirements. It also directs the FCC, FTC, and White House advisors to develop standards and a legislative proposal that could eventually preempt inconsistent state AI rules.

Why it matters: The EO intensifies the federal government’s move toward national AI preemption and signals potential challenges to existing state AI and algorithmic-bias laws in Colorado, California, New York, Texas, and other jurisdictions. While none of these state rules are invalidated today, companies face a period of uncertainty as federal agencies begin evaluating—and potentially contesting—state frameworks that impact AI development, deployment, and disclosures.

Potential action: Companies should continue complying with current state AI requirements but prepare for rapid shifts. This includes mapping where their AI tools intersect with state laws flagged in the EO, reviewing model-risk and disclosure processes for consistency across jurisdictions, and monitoring upcoming DOJ, Commerce, FCC, and FTC actions that may reshape obligations through litigation or federal preemption.

Read More Here(MWE)

Events

IAA Investment Adviser Compliance Conference Returns to D.C.

Summary: The Investment Adviser Association will host its Investment Adviser Compliance Conference on March 18–20, 2026 in Washington, D.C. The conference brings together SEC staff, CCOs, legal advisers, and compliance professionals for practical discussions on current regulatory priorities and compliance best practices.

Why it matters: The event is a key forum for advisers to hear directly from regulators, stay current on exam and enforcement trends, and benchmark their compliance programs against industry standards.

Potential action: Firms should consider registering early, identifying priority sessions aligned with their regulatory focus, and using the conference to connect with peers and regulators.

Read More Here (IAA)