Portfolio Info‎ > ‎

Regulatory: AFA-SEC

In the United States of America, the regulatory agency responsible for oversight of asset management firms is the U.S. Securities and Exchange Commission, commonly known as the "SEC".  The SEC website is located at www.sec.gov .  The SEC ensures that people entrusted with the management (the fund managers) of other peoples money (the investors) follow the rules and treat their investors fairly and honestly. 
 
In this competition, we have a simulated (pretend) version of the US SEC called the AFA-SEC.  The AFA-SEC will conduct regularly scheduled and random compliance audits to ensure that your fund is following the rules of the game.  Violations of the rules & regulations will result in a visit to your fund from the Men & Women in Black at the AFA-SEC.
 
 
Rules & Regulations
 The rules of this competition are very simple, and broken down into two types:

Penalty & Fine Rules - these are rules that if violated will result in some kind of penalty and/or fine for the fund.  These rules include:

  1.  The fund must maintain a positive cash balance at all times
  2. The fund does not invest in unallowed securities - unallowed securities are any kind of security other than the common stock from companies actively listed on the S&P 500 Index
  3. The fund does not engage in short selling - short selling is selling more stock then the fund owns causing the fund to have a negative number of shares in any company

Termination Rules - these are rules that if violated will result in suspension and/or termination of the fund.  these rules include:

  1. Any attempt to manipulate the price of shares during purchase or sale
  2. Back-dating or otherwise attempting to change the nature of any transaction
  3. Hacking into a competitor's fund and using that information to improve your fund's performance
 
Fines for Non-Compliance
Consequences of violating the Penalties and Fines type of rules includes:
  • $10,000 a day for every day cash balance below zero
  • $50,000 for purchasing unallowed securities
  • $20,000 for each occurance of a short sale
 
Termination for Non-Compliance
Any kind of cheating of investors will result in immediate suspension of the fund until a proper investigation can be conducted.  Any fund found to have violated any of the rules identified in this section this may result in closure of the fund and a "perp walk" profile of the offending fund on the weekly financial news broadcast.  Examples of cheating include:
  • Any attempt to manipulate the price of shares during purchase or sale
  • Back-dating or otherwise attempting to change the nature of any transaction
  • Hacking into a competitor's fund and using that information to improve your fund's performance
  
Regularly Scheduled Compliance Audits
To ensure everyone follows the rules, regularly scheduled complaince audits will occur monthly by AFA-SEC staff.  During these audits, AFA-SEC staff will remotely check your funds holdings to ensure that it is compliant (not in violation) with the rules detailed in this section of the website.  Funds found to be in violation of these rules will face fines and/or termination as defined in the "Fines for Non-Compliance" and "Termination for Non-Compliance subsections of this section.
 
 
Random Compliance Audits
In addition to the regularly scheduled complaince audits, random audits will occur which may include an in-person meeting with your fund, review of fund records, etc.  Teams selected for a random complaince audit will be contacted by AFA-SEC staff to schedule a meeting for the audit.  Funds found to be in violation of these rules will face fines and/or termination as defined in the "Fines for Non-Compliance" and "Termination for Non-Compliance sections.
 
 
Investor and Competitor Complaint Audits
Investors may file a complaint against your fund with the AFA-SEC if they feel they are being treated unfairly.  These complaints are investigated and could result in an audit or fines if the complaint is deemed credible.
 
Competitor funds may also file complaints against your fund if they believe that your fund is cheating or not playing by the rules.  As with investor driven complaints, complaints filed by competitors are investigated and could result in an audit or fines if the complaint is deemed credible.
 
To file a complaint or report unfair competition, please contact:
 
 
 
 
Comments