M. Jacko
Managing Partner and CEO

Michelle L. Jacko, Esq.

Managing Partner and CEO

Michelle L. Jacko, Esq. is the Managing Partner and CEO of Jacko Law Group, PC (“JLG”), which offers securities, corporate, real estate, and employment law counsel to broker-dealers, investment advisers, investment companies, hedge/private funds and financial industry professionals. In addition, Ms. Jacko is the Founder and CEO of Core Compliance & Legal Services, Inc., a compliance consultation firm.

Ms. Jacko specializes in investment adviser, broker-dealer, investment company and private fund regulatory compliance matters, internal control development, regulatory examinations, transition services, and operational risk management. Her consultation practice is focused on the areas of regulatory exams and formal inquiries, investment and merger and acquisition transactions, exit and succession planning, annual reviews, policies and procedures development, testing of compliance programs (including evaluation of internal controls and supervision), mock exams, senior client issues, cybersecurity, Regulation S-P, and much more.

Over the years and through a transformative market, Ms. Jacko has also developed service solutions throughout her practice, focusing on regulatory, compliance, commercial and corporate strategic solutions for the financial industry. Her practice focuses on formations and registration of broker-dealers, investment advisers and funds and platforms associated with each of these business models.  She focuses on transition and succession planning for companies, spearheading Jacko Law Group’s mergers and acquisitions practice area. She aligns her legal team to directly apply experienced legal acumen and business-savvy foresight to assist clients navigate and traverse the breakaway, formation, and growth plan for their corporation’s continued achievement, expansion, and upward trajectory.

Throughout this process, Ms. Jacko uses her 27 years of regulatory compliance experience to provide risk mitigation strategies to businesses.  She provides her clients with risk assessments, annual reviews and gap analysis, and serves as lead attorney for SEC and FINRA enforcement matters, regulatory formal inquiries, and regulatory examinations.  She has developed a practice that successfully helps our clients to be prepared for examinations through meticulous preparations, including mock interviews, compliance program document reviews, and counsel to members of senior management and interfacing with regulators throughout the process.   She frequently provides counsel on Chief Compliance Officer liability issues, assists advisors with regulatory reporting of disciplinary events and customer complaints, provides counsel on various representative onboarding and exit considerations and drafts complex agreements and client disclosure documents.

Utilizing an unparalleled service with a visionary strategy, Ms. Jacko’s counsel contributes to client success. She fosters trust amongst her team and has forged a path for JLG’s growing and multifaceted merger and acquisition practice, general corporate counsel services and regulatory compliance practice areas.

As a frequent presenter at national financial industry conferences, Ms. Jacko delivers insightful and thought-provoking workshops regarding industry hot topics and rising compliance issues. She is a frequent contributor to various industry journals and publications, including Barron’s Advisor, Charles Schwab, Investment Adviser Association’s IAA Today, National Society of Compliance Professionals’ CurrentsLawyer Monthly MagazineThomson Reuters, and more.  She also is a featured author in Modern Compliance, Vol. 1 and 2.

Ms. Jacko served as the former Vice-Chair of Education of the Corporations Committee for the State Bar of California Business Law Section and is a two-time Board member alumn of the National Society of Compliance Professionals. She is the Co-Founder and a member of the Southern California Compliance Group and also is a FINRA Arbitrator. Ms. Jacko is a member of Vistage International and actively participates in her community.

JLG and Ms. Jacko are proud to be members of the National Women Business Owners (NABWO) Corporation.

Throughout her career, Ms. Jacko has established herself as an influential leader, both locally and industry-wide. She has received numerous accolades and recognitions for her contributions, impact, and thought leadership. Since 2019, she has been selected as a finalist for San Diego Business Journal’s (SDBJ) CEO of the Year Award (2019-2022). She has also been selected for inclusion for the SDBJ’s 2022 Women of Influence 50 over 50, 2021 -2022 Women of Influence in Law SDBJ’s 2018-2022 Business Woman of the Year, 2020-2022 San Diego 500 Influential Business Leaders Award, 2020-2022 SD500, and prestigious 2020 Most Admired CEO Awards. Alongside the many awards from the SDBJ, Ms. Jacko  also was selected as a finalist for San Diego Magazine’s 2020–2021 Influential Women: Woman of the Year Award and was honored as a finalist for the 2019 NAWBO Bravo Awards - San Diego. International magazine CEO Today also selected Ms. Jacko as one of the 2019 and 2020 Business Women of the Year Awards. She also received Acquisition International magazine's Global Excellence Awards: Most Influential Woman in Securities Law 2019–2020 - San Diego, and locally was selected by San Diego Metro as one of the 12 Women of Influence in San Diego, CA.

Before starting both companies, Ms. Jacko previously served as Of Counsel at Shustak & Partners, PC. Prior to that, she was Vice President of Compliance and Branch Manager of the Home Office Supervision team at LPL Financial Services, Corporation (Linsco/Private Ledger). She also served as Legal Counsel of Investments and Chief Compliance Officer at First American Trust, FSB and held the position of Compliance Manager at Nicholas-Applegate Capital Management. In addition, Ms. Jacko was with PIM Financial Services, Inc., and Speiser, Krause, Madole & Mendelsohn, Jackson.

Ms. Jacko received her J.D. from St. Mary’s University School of Law and B.A., International Relations, from the University of San Diego. She is admitted to the State Bar of California and United States District Court, Southern District of California. Michelle holds NSCP’s Certified Securities Compliance Professional (CSCP) designation and is a member of the National Association of Women Lawyers (NAWL).

In addition to her many accomplishments, Ms. Jacko is also dedicated to giving back to her community and charitable organizations. Throughout the years she has dedicated her time and efforts to numerous organizations, including the Autism Tree Project, Wounded Warriors Project, the ASCPA, the San Diego Food Bank, School of the Madeleine and more. She also supports whenever she can the military community.  It is her dedication to her team, her practice and her community that has laid the foundation for JLG’s impact and continued growth and success.

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How a Popular Index’s Lack of Risk Disclosures Resulted in a Recent $9 Million SEC Fine: Lessons Learned
June 23, 2021

The absence of simple disclosure in a licensing agreement about an Auto Hold feature for a volatility index managed by S&P Dow Jones Indices (S&P DJI) prompted the U.S. Securities and Exchange Commission (SEC) to take action, further establishing a framework for index providers.

On May 17, 2021, the S&P DJI agreed to pay $9 million to settle an SEC enforcement action that should be a topic of discussion at your firm’s next compliance and risk management meetings. The fine resulted from S&P DJI’s failure to update its S&P 500 VIX Short-Term Futures Index ER every 15 seconds as required between 4:09 and 5:09 p.m. on February 5, 2018. During that one-hour period, the index in question was not updated at all, even as the underlying CBOE Volatility Index (VIX) was spiking 115% higher. You can learn more about this from the SEC Press Release, SEC Order, and SEC Public Statement.

A Costly Glitch

The turmoil resulted when an Auto Hold mechanism for the index was triggered on a day of wild trading and extreme market volatility known as “Volmageddon”. But the markets were not aware of the S&P DJI’s Auto Hold feature because it was not publicly disclosed in any index licensing agreement and not overridden that day by S&P DJI personnel. The SEC levied the $9 million fine against S&P DJI for briefly publishing “stale” prices for an index that underpinned a popular volatility-linked fund known as XIV when it imploded.

Sadly, all of this could have been avoided had proper disclosures been made and standard operating procedures implemented at the outset.

It’s important to note that the SEC said the lack of disclosure on the Auto Hold trigger was exacerbated by the fact that one of the two index managers responsible for updating the index in question that day was out of the office. That left only one person to monitor “thousands of indices” and created the need for S&P DJI to update its policies and procedures for its index managers.

A Domino Effect

S&P DJI’s failure to update its index has prompted investors to file a lawsuit alleging fraud against Credit Suisse, whose ability to price its VelocityShares Daily Inverse VIX Short-Term Exchange-Traded Notes (XIV Notes), was dependent on the S&P DJI index. The SEC said the stale data contributed to a catastrophic 96% drop in the value of XIV Notes and an estimated $1.8 billion in losses for investors, who allege that Credit Suisse tried to collapse that market by shorting VIX futures and hedging XIV Notes to profit at their expense.

“When index providers license their indices for the issuance of securities, as S&P DJI did here, they must ensure that the disclosure of critical features of their products, as well as the publication of real-time values, are accurate,” said Daniel Michael, chief of the SEC enforcement division’s complex financial instruments unit.

Prominent disclosures within the License Agreement and elsewhere could have put the markets on notice and potentially could have prevented these headaches.  Fallout from this event is likely to continue as index providers are being more heavily scrutinized by regulatory authorities. Five years ago, the European Securities and Markets Authority (ESMA) was given regulatory responsibility over index and benchmark firms in the European Union. Such firms are not regulated in the U.S. because indices are not considered securities. They are viewed as objective and mathematical reflections of markets. But it is speculated that could now change.

The exponential growth of ETFs has helped the three largest index firms – S&P DJI, MSCI, and FTSE Russell – take a combined 70% market share. Overall, passive investment funds have $15 trillion in assets under management. The index industry’s rise to prominence has increased speculation the SEC might shelve the “publisher’s exclusion” that shields index providers from being classified as investment advisers under the ’40 Act.

Key Takeaways

The pricing snafu at S&P DJI can be attributed to human error. The mid-level manager on duty the day of Volmageddon should have been able to follow existing policies and procedures and continue pricing the index. Disclosures related to the Auto Hold future also should have been prominently made.

Money managers often enter into licensing agreements with various companies to create custom indices. If you haven’t yet done so, now’s the time to perform due diligence on your index providers and ask whether there are any features, such as an Auto Hold trigger, that they have not disclosed that would affect pricing.  

Indexers, meanwhile, should review their policies and procedures to determine whether any manual functionalities have been omitted that should be included. Jacko Law Group can work with your team to help perform due diligence, ask the right questions, and make certain  necessary disclosures are made to protect your firm and investors. Give us a call today at (619) 298-2880 or visit us at jackolg.com for more information.


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