Publications

SEC Brings Enforcement Action Involving Trade Errors

Fall 2005
Udi Grofman
Investment Management Developments - Fall 2005

On April 6, 2005, the Securities and Exchange Commission ("SEC") settled an enforcement action against a registered investment adviser and its principal (In the Matter of Michael T. Jackson and EGM Capital, Advisers Act Release No. 2374) in which the SEC alleged that the advisory firm wrongly passed to its clients losses resulting from a trade error caused by the firm.  Although the enforcement action leaves unresolved many questions involving trade errors, it underscores the SEC's general view that advisers should bear losses due to trade errors and should maintain policies and procedures to address trade errros.