SEC Sanctions Buckingham Capital Management, Its Chief Compliance Officer and Its Research Affiliate for Inadequate Handling of Material, Non-Public Information

As further evidence of the renewed focus of the Securities and Exchange Commission (SEC) on insider trading, especially within the hedge fund and investment management industries, the SEC has issued an Order imposing fines and a cease and desist order on research boutique The Buckingham Research Group, Inc. (BRG), investment manager Buckingham Capital Management, Inc. (BCM) and Lloyd R. Karp (Karp).  BCM is a wholly-owned subsidiary of BRG and shares an office suite with it.  Karp served as chief compliance officer for both BCM and BRG.  The SEC claimed that, commencing at least as early as 2005, BRG and BCM failed to have in place adequate procedures “to prevent the misuse of material, non-public information,” as required by both the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934.  In addition, BRG, BCM and Karp failed to follow the limited procedures that they did have in place and fabricated data in response to an SEC examination of those procedures.  We summarize the SEC’s Order and the remedial measures it requires.

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