Securities and Exchange Commission Settles Another Administrative Proceeding Against Investment Adviser for Inadequate Material Nonpublic Information Policies and Procedures

By Michael E. Storck

October 21, 2016 | Corporate Blog

On October 13, 2016 the U.S. Securities and Exchange Commission settled administrative proceedings against a San Francisco Investment Adviser, Artis Capital Management, L.P. (“Artis”) and its senior research analyst Michael W. Harden (“Harden”).  The Proceeding relates to Artis’ failure to enforce its existing policies to prevent the misuse of material nonpublic information, and deficiencies in the scope and design of the policies.

The SEC’s Order specifies that Artis’ written policy failed to address the specific situation in which an Artis employee, Matthew Teeple (“Teeple”), frequently interacted with public company executives in various venues. On at least 2 occasions, Teeple provided Artis’ senior analyst Harden with material nonpublic information.  Neither Harden, nor Teeple, complied with Artis’ written policy requiring each to disclose to Artis’ COO that they had come into possession of material nonpublic information from any source.

The SEC’s proceeding is further evidence of the SEC’s continuing emphasis on regulating the adequacy of and compliance of Investment Adviser employees with insider trading and material nonpublic information use policies.

Investment Advisors should review their existing policies and make any changes necessary to the policies as well as their procedures to prevent misuse of material nonpublic information.

For further information, contact Michael E. Storck at 716-853-5100.

See a copy of the SEC’s Order here.

Disclaimer: The information in this post is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from our firm or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

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