text:
the painting ranks apart from architecture, the sculpture, graphics and the design among the classical kinds that Forming art.
the oldest certification of the painting are the cave painting with animal representations from the last ice age and/or. the Jungpaläolithikum.
Painting and design, in addition, relief and plastics are as artistic styles from the time of before 35.000 to 10,000 years admits. European Höhlenmalerein are particularly well-known from Spain and France. The murals in the cave of Lascaux in Southern France were discovered 1940. The motives for animal, cattle, deer, Horses and bulls are represented in impressing way and belong to the oldest well-known painting of mankind. Also made of Africa, Asia and Australia early rock painting is well-known.
meets antiquity and antique one of latein the Orient (starting from 10.000 v. Chr.) and in Egypt (starting from 3.000 v. Chr.) as Wandmalerei, on Crete (2,000 v. Chr.) as Freskomalerei.
In the 3.Jh. n. Chr. calls the Greek writer Philostratos the painting an invention of the Gods(Eikones 1). By these and other statements of antique authors it is testified that the painting was particularly highly respectable already in the antique one. More highly even than the sculpture, since the painting possessed the advantage of the close-to-reality imitation, as well as in the conditions was,to make possible a broader telling spectrum. Today this is hardly still comprehensible, since only very meager remainders of the antique painting kept. This comes along that as image carrier mainly wood was used, further stone, clay/tone and stucco. The use ofIvory, glass and canvas hardly arise. In the antique literature Plinius functions as main source for the different techniques of the antique painting. For this referred 35 is or also on Vitruv , de architectura 7,7-14 to its work naturalis historia.
the Enkaustik or the Temperatechnik application found mark techniques for painting of wood. With the Enkaustik functioned warm wax as bonding agent. The warm or cooled off emulsion could be laid on afterwards with brushes or metal devices. This technology is by far more aufwändiger, however one achieves a longer durability and a higher gloss of the colors by her. With the Temperatechnik however the Farbpigmente with a water-soluble material become, z. B. Egg, and oil and/or. Fat blends. There wood as well known very easilyweathered and only under certain conditions keeps, we have archaeological certifications from this range hardly.
The Temperatechnik is used also with stone. Modern attempts showed that one can lead the brush on a smoothed marble surface very easily andthus a very good mark result to be obtained can. On rough surfaces other stone places, like z. B. Porously or limestone, only or occasionally also several layers stucco or chalk reason had to be applied, in order to adjust the surface.
On clay/tone became usuallywith fuelfirm Erdfarben and/or. Tonschlicker painted, in rarer cases also with multicolored opaque colors. Into this materials group the large quantity of painted ceramic(s), also vases falls mentioned, from Italian vaso, the container. Here are the schwarzfigurige and the rotfigurige vase painting toodifferentiated. The schwarzfigurige painting developed in archaischer time and as the first of the Korinthi workshops was used. Only starting from the center 6. Jh. v. Chr. became Athens the prominent industrial centre of the schwarzfigurigen vases. With this technology become alsoa brush the ornamentalen and figürlichen representations with black Tonschlicker on the container applied. The Binnengliederung was afterwards scratched with pointed equipment. The container was only then placed to the fire into the furnace. The rotfigurige technology comes into Athensapproximately around 530 v. Chr. up and the schwarzfigurige technology displaces increasingly. Here now the reverse principle is pursued. The container is covered with black gloss clay/tone, whereby the ornamentations and figures remain left blank. The Binnenzeichnung can be painted thus instead ofscratched, therefore a softer, more organic body against gift of the figures is possible.
With the Wandmalerei Kalkmörtel in several, ever more finely becoming layers was laid on and formed the mark reason for the following color order. The surface was for this smoothed and thereupon the pure orwith bonding agents shifted color on the damp finery laid on. As bonding agents are delivered to us marble flour, Kasein or loam water. Due to the chemical reactions during the drying process a kind sintering of the surface was caused, which to a particularly durable connection of the colorswith the mark reason led. This version of the color order is called aluminium fresco, since damp finery forms the underground. One paints however on dry finery, this technology is called aluminium secco.
due to the small quantity ofto archaeological certifications the Farbenspektrum of the antique ones can be reconstructed only very insufficient. In addition it is to be observed that the colors red and blue kept best. Helpfully here the modern techniques, those by material analyses, are UV beside antique sources of writingand touching light photographs a view of the antique color world to give can. From these sources it is well-known that Farbpigmente could be artificially manufactured naturally, as well as. As material functioned mineral and Erdfarben, vegetable, animal substances, but z. B. also zerstossenes glass toProduction of the color blue. As previously mentioned, colors could be laid on purely, in addition, mixed. Likewise several dye films could be applied one above the other.
the archaeological certifications of the Greek painting cover, as already mentions above, onlyfew examples. Sources of writing call us the names of important artists, as well as the topics of their most important works of art. Sometimes even attachment places are delivered to us. We have visual certifications mainly from the sepulkralen context, as well as by reflections from other kinds or epochs. Figürlich paintedVases or mosaics can help in limited measure to close conclusions on the missing painting. Here caution is required, since it to changes or reorganizations can have come due to the different kinds. One may not thus with a original-faithful copya painting count!
after the fall of the minoisch mykenischen culture with its qualityful Freskomalerei (z. B. Knossos) set the Greek Wandmalerei only again in 8. Jh. v. Chr. . Pinakes, painted Tontäfelchen form the earliest certifications, became in 8.– 6. Jh. v. Chr. in larger quantities manufactured and than Weihegeschenke in Heiligtümern uses. This rectangular Täfelchen is reduced in its function to the image field and reflects clearly the invention of the board painting again. A wooden example of this kind hasitself only from that 6. Jh. v. Chr. received and in a cave, close Korinth was found, which was geweiht the Nymphen. On these four Holztäfelchen a Weiheinschrift and a colored painted victim scene are represented (I. Scheibler, Greek painting inthe antique ones (1994) fig. 40).
Clay/tone boards found also as Verkleidungsplatten or Metopen on buildings, z. B. Temples, use. In 7. Jh. v. Chr. on stone was also already painted, where after well-known source situation, both outlining and Binnenzeichnung, and mono chromecalm surfaces were used. Grossfigurige of certifications of the Greek painting in larger measure in graves kept, which remained mainly in the peripheral areas of the Greek world. The Greek grave painting affected the sepulkralen range Unteritaliens in large extent andEtruriens. A good example for this forms the Tomba del Tuffatore in Paestum, around 480 the v. Chr. dated. The bloom time of the Greek painting is testified us mainly by the Macedonian chamber graves. In Vergina is the grave of PhilippII., on whose front a vielfiguriger Jagdfries is shown. In the brightism wins far group to meaning, the Wandmalerei of the residential architecture. Since that 5. Jh. v. Chr. became for example in [[Pella (Macedonia) |]], Priene or Delos the wallsin the so-called. Brick-work style with partial figürlichen or ornamentalen Friesen shifts.
Heiligtümer: Architecture twisting run gene, Votive, Kultbiler etc.
private buildings: Painting in houses,painted statues etc.
graves: Grave-added, painted fronts, Sarkophage etc.
the number and alsothe kind of the archaeological certifications of the Roman painting differ substantially from the Greek painting. With the Roman certifications the large group of the Wandmalerei dominates, whereby it is obvious a Roman phenomenon and not only to coincidence of the excessive quantity situation.Pliniusdeplored in its naturalia historia 35, 118 the clear change from the board to the Wandmalerei. Roman artist names are mentioned in by far smaller number in the sources of writing than their Greek counterparts, whereby the occupation of painter might have quite been considered as outstanding. Inlaterepublican time were often Greek-eastern painters, probably usually as slaves, for Roman clients active. They were not more trained only than their Roman colleagues, but also with the Greek style trusts, which was particularly popular at that time.
for the officialRepresentation art of the Roman realm counts the history painting. At present the change of 4. to the 3. Jh. v. Chr. developed, it is understandable only by literary references and by a small number of reflexes in the September joke ral art. These pictures showed scenesfrom won wars, conquered cities, peoples with their rulers, as well as maps with drawn in theaters defeated. These, probably by the majority board pictures, could to be carried in triumph courses and the people at the victory of the respective Imperators very closely sharings leave. Literary sources paint thoseoriginal-faithful would show the represented persons and scenes out. With the earliest received example of this group it acts around a Freskofragment out of the Fabiergrab of the Esquilin in Rome. Here it concerns a part of a large picture cycle of theearly 3. Jh. v. Chr. with representations from the SAM rivet wars (R. Ling, novel painting (1991) fig. 6) In four received registers to the Roman virtues one refers, virtus and fides populi Romani.
As the second example is now on thoseKind of the Portraitmalerei referred, which played an important role in the Roman ancestor cult. The Portraits was painted on wood, canvas, glass and stucco. In emperor-temporal Egypt the old-worthy custom of mummifying was connected with the desire for Roman self-manifestation. Individually lookingPortraits were painted on timber panels and put in place of the Egyptian dead masks on the face of the mummified deceased. In Fayum, a large oasis in the Libyan desert, the largest amount of that us meanwhile 1000 admitted Mumienportraits found. By thatoutstanding the pieces are kept dry desert climate, whereby it is made possible to study and analyze the Polychromie and also the mark techniques sufficiently.
The today's knowledge of the antique painting predominantly originates from the find situation of the Wandmalereien of the buried Vesuvstädte Herculaneum and Pompeji. This excessive quantity situation affected the research very strongly. 1882 published August Mau its „history of the decorativen Wandmalerei in Pompeji “, where he divided those for at that time well-known Wandmalereien into four large styles. „The four pompeianischen styles “become over thoseBorders Pompejis for the entire Roman Wandmalerei to 79 n. Chr. used.
this Roman version of the Greek brick-work style (see Delos) imitates essentially monumental ashlar masonry by colored painting, cutting or plastic organization with stucco.
here will become at the beginning of still material, buildable architecture copied, the walls increasingly broken and releases „architecture windows “. In the advancement it comes to several levels, which depth effect of architecture front and background in strengthened. In the latePhase the architectural elements, like columns, become elbows, column etc. ever more thinned out, did not become buildable out of touch with reality and any longer. In addition the walls are again increasingly closed and one tended again to two-dimensionality.
the walls are nowcompletely closed and in two dimensions arranged with mono chrome painted color surfaces in the colors black, red and white. Volumes, lines and architectural elements divide the surfaces into zones. The central zones can carry framed film gates, for example with mansion landscapes or mythologischen scenes.
in 4. Style the achievements of the four styles are into one another united. Into those horizontal and vertically separated walls are trained decoration volumes, free-floating Medaillons and image fields. The architectural elements win volumes, are clearly more plastic represented. Luxuriös andrichly arranged ornamentations with light shade effect lend a altogether rich and more real effect.
Those opinion frequently which can be read, the bloom time of the römsichen painting would have gone with the fall of the Vesuvstädte to end, is hardly founded to be proven. Also after the year 79n. Chr. still qualityful painting was in many places found. However these certifications from different parts of the Roman realm are and to arrange, further not yet as sufficiently chronologically often difficult worked on as the pompejanische painting. Like already the 4. Styleshowed, became also after 79 n. Chr. the well-known representation repertoire further used and again connected. Also in late ancient times artful painting is proven, one thinks only of the Katakombenmalerei.
thatArt agent of king Ludwig I., Martin of Wagner, bereiste on behalf the king in the year 1812 an auction around those found Giebelskulpturen of the Aphaia temple of Ägina for the Glyptothek from Munich to to evenly only acquire. After detailed view described itthe condition of the sculptures and closes on any painting. Further he notices that the colors withstood the influences of the weather differently for a long time. The Glyptothek had been splendourful equipped by Leo of Klenze, whereby walls, Gesimse, marble base etc. were colored calm.Numerous opponents meant, who would impair colored equipment the effect of the sculptures and exhibits, but were the consciousness of the antique Polychromie already available. King Ludwig I. became the driving Kraft in the attempt to revive the Polychromie of architecture. Thus leftit for example establish 1836 a small, colored seized round temp moose in English garden. But here, as also with other polychromen attempts the color peeled rapidly. The stone was again brightly, there a durable bonding agent against the weather not found residents of Munichwill could. John Gibson was colored reconstructed first, that 1851-56 a marble sculpture, „tinted the Venus “in the Walker kind Gallery in Liverpool. Here the technology of the wax painting used around lips, eyes, hair, garb and also the skin toosound.
In the second half 19. Jh. became Dresden the center of the argument with the antique Polychromie. The director of the Dresdens sculpture collection, George faithful, represented vehement its opinion that the antique sculptures would have been completely colored calm. It leftGypsum castings of sculptures make, which were then painted by artists. However it does not concern here reconstructions, since no color remainder had remained more on the sculptures. One oriented oneself at colored Terrakotten and other marble sculptures with received color remainders.However it is to be owed faithful that the view of the antique Polychromie was spread and in the public understanding for it was waked. Around the turn of the century one was meanwhile reliably that antique sculptures were painted, one discussed itself now, like thesePainting had looked. Were formed several parties, whose opinions between the absolute endorsement of the total Polychromie reached up to the complete refusal.
For antique painting Adolf Furtwängler, the director at that time of the Glyptothek won, fundamental realizations. After thatthe interest in this topic lost itself the First World War. During the Second World War the Glyptothek was strongly destroyed, whereby only more witnessed some few water colors of their appearance at that time. The today's Glyptothek promotes the effect of the marble sculptures by the smallColor contrasts and by the free list of the sculptures. Almost all colored reconstructions, which are today issued, were reconstructed by Vinzenz Brinkmann. Of 16. 12. 2003 to 29. 2. 2004 found one in the national antique collections and the Glyptothek MunichExhibition with the title „multicolored Gods. The coloredness antique sculpture “instead of. Who did not have the luck the exhibition to visit, is to the bibliography and referred the catalog.
Even if we stand today before the colored reconstructed sculptures, is it still extremely unusually to imagine the coloredness of antique sculptures. The picture of the white, shining temples and sculptures is still in our heads prevailing, even if we know it better.
the board painting as painting on independent mark underground such as timber panel or late canvas, developed only in the Middle Ages. The European painting was in the Middle Ages,the clients accordingly, almost exclusively religiously coined/shaped. It came to painting of churches and monasteries and to the decoration of Kirchenchören and devotion chapels with altarpieces. Other Sujets such as Portrait, category pictures, landscape painting or quiet life came only in the late Middle Ages and intothe Renaissance painting in addition.
an important development took the painting in the Renaissance with the lasting advancement of the techniques of the oil painting, to the Zentralperspektive, the representation of allegorischer motives of the antique ones andduring the stress of individual characters in the people representation with help of the knowledge of anatomy.
January van Eyck (around 1390-1441) created for the first time independent portraits and Portraits; Albrecht Dürer (1471-1528) painted 1493 first admitted autonomous Selbstbildnis in Europe; Albrecht of old villages (over1480-1538) made as first painters the landscape the main topic.
Above all the Italian painting of the high Renaissance in the cities Florenz, Venice and Rom brought important realistic works of the painters to Leonardo da Vinci (1452-1519), Michelangelo (1475-1564), Raffael (1483-1520) and Tizian(1477-1576) out, those in perspective, form, color, expression strength and pictorial brilliance are example-giving and the screen end art of Europe until today lastingly affected.
In 17. Numerous Netherlands painters quiet lives painted century; January sea (1632-1675) was at the same time inMaster of the Vedutenmalerei (opinion of Delft, 1661).
A privileged position takes the baroque painter rem Brandt (1606-1669) and its painting singular in psychological style, light arrangement and colour, who apply until today as unsurpassed.
With the arising of the photography the painting saw itself confronted with new challenges and tasks, those not without influence on their development in 19. Century remained. To center 19. Century developed the pictures predominantly in artist studios. The Braith Mali museum in Beaver oh to the tear beherbegt such original studios. This function applies also to the present. With the French painters of the Impressionismus however the free light painting begins. To this direction Camille Pissarro ( 1830-1903) belong, to Èdouard Manet (1832-1883), Edgar Degas (1834-1917), Paul Cézanne (1839-1906), Alfred Sisley (1839-1899), Claude Monet (1840-1926), Berthe Morisot (1841-1895) and Pierre-Auguste Renoir (1841-1919). Paul Cézanne can already, as in certain measure also Vincent van Gogh and Edvard Munch, when Wegbereiter of the modern trend are designated. Straight Cézannes of works marks thatTransition, he solves nevertheless increasingly from the rendition of the reality and turns to the the subject of the painting, form and color.
Important style directions of the modern painting of the first half 20. Century are the abstract painting, the Kubismus, the Dadaismus, the Surrealismus and the Russian avant-garde with important artists such as André the Paquet, Mark Chagall, El Lissitzky, Mikhail Fjodorowitsch Larionow, Natalija Sergejewna Gontscharowa and Wassily Kandinsky lastingly on the entire art inEurope and world-wide worked. National characteristics are the expressionism (Germany), the Futurismus (Italy), the Kubo Futurismus constructionalism and the Suprematismus (Russia) as well as the Vortizismus (England). An important characteristic for the art of dier modern trendis the abstract painting, which developed within different style directions. Further important style directions 20. Century are it Tachismus to a large extent and after 1950 the Informel. The American Abstract Painting and the minimum kind must as originally US-American art trends thatsecond half 20. Century to be regarded. The Pop kind outgoing from Great Britain experienced in particular in the USA its high points. Parallel developed Fluxus, happening and performance. Apart from all these currents also a modern realism developed,exemplarily for that photo realism stands.
Often the end of the painting was proclaimed already hastily. That happened z. B. in view of of minimum kind and concept art, to finally „ the new wild ones “and/or. „Boy wild one “into the 1980ern thoseArt scene conquered and again one Renaissance of the painting introduced, e.g. with the famous, commercially very successful post office-modern materialists („capitalistic realism “) and irony core Gerhard judges and Sigmar Polke. At the beginning 21. Century maintains ground the painting beside manyother art forms (including digital media, space installation, video art) - causes also by an art market, which requires further for (representative) relating to crafts manufactured board pictures for its customers - further as contemporary artistic medium. It stands for a demand for allegedly„Authenticity “and the figure of the artist genius.
The painting further many young - rather again realistically, gegenständlich painting - artists used up themselves (see: New Leipziger school).
Legendary painters such as Kasimir Malewitsch, Pablo Picasso (1881-1973), Piet Mondrian(1872-1944) the painting 20 has. Century artistically crucially coined/shaped.
Important painters after 1945 are beside many different: Andy be-get, Robert noise mountain, franc Stella, bar-nicely Newman, Jasper John, Asger Jorn, George Baselitz, Jörg Immendorff, Sigmar Polke, Martin Kippenberger, Albert Oehlen, Gerhard judge, wolf Vostell.

matches: v. v. v. v. v. v. v. v. v. v. v. v. v.


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Hickey v. Green 388 Mass. 1102; 445 N.E.2d 156; 1983 Mass.
Lohmeyer v. Bower 170 Kan. 442, 227 P.2d 102, 1951 Kan.
Conklin v. Davi 76 N.J. 468, 388 A.2d 598, 1978 N.J.
Stambovsky v. Ackley 169 A.D.2d 254, 572 N.Y.S.2d 672, 1991 N.Y. App. Div.
Lempke v. Dagenais 130 N.H. 782, 547 A.2d 290, 1988 N.H.
Frimberger v. Anzellotti 25 Conn. App. 401, 594 A.2d 1029, 1991 Conn. App.
Rockafellor v. Gray 194 Iowa 1280, 191 N.W. 107, 1922 Iowa Sup.
Sweeney, Administratrix v. Sweeney 126 Conn. 391, 11 A.2d 806, 1940 Conn.
Rosengrant v. Rosengrant 1981 OK CIV APP 18; 629 P.2d 800, 1981 Okla. Civ. App.
Murphy v. Financial Development Corp 126 N.H. 536, 495 A.2d 1245, 1985 N.H.
Bean v. Walker 95 A.D.2d 70, 464 N.Y.S.2d 895, 1983 N.Y. App. Div.
Citation. 169 A.D.2d 254, 572 N.Y.S.2d 672, 1991 N.Y. App. Div.
Brief Fact Summary. The Plaintiff, Stambovsky (Plaintiff), brought suit to rescind a contract to buy a house after he discovered the house was purported to be haunted, thus lowering its value.
Synopsis of Rule of Law. A condition that impairs the value of property, known to the seller and left undisclosed to the buyer can constitute a basis for rescission of the contract.
Facts. The Plaintiff moved to a new neighborhood where he contracted to buy a house. The Defendants, Ackley and a real estate agency (Defendants), knew the house they had just sold to the Plaintiff was haunted. This was a widely known fact in the area and the house had even received national press attention. After Plaintiff discovered this, he sued for rescission. The trial court dismissed his complaint.
Issue. Whether an undisclosed condition that impairs the value of the property is a basis for rescission of the contract.

matches: v. v. v. v. v. v. v. v. v. v. v.


1. Section 8 of the Immigration Act of 1917 does not make it a punishable offense to conceal or harbor aliens not entitled to enter or reside in the United States, in view of the ambiguity in the statute as to the scope of the offense and as to the penalty which Congress intended to prescribe. Pp. 333 U. S. 483-495.
2. Although Congress intended by § 8 to make criminal and to punish concealing or harboring of aliens, the uncertainty as to the nature of the offense or offenses and as to the applicable penalty poses a problem which is outside the bounds of judicial interpretation, and can be solved only by Congressional action. P. 333 U. S. 495.
Respondent was indicted for concealing and harboring aliens, in alleged violation of § 8 of the Immigration Act of 1917. The District Court granted a motion to dismiss the indictment. The United States appealed directly to this Court under the Criminal Appeals Act. Affirmed, p. 333 U. S. 495.
or shall conceal or harbor or attempt to conceal or harbor, or assist or abet another to conceal or harbor, in any place . . . any alien not duly admitted by an immigrant inspector or not lawfully entitled to enter or to reside within the United States, under the terms of this Act, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine not exceeding $2,000 and by imprisonment for a term not exceeding five years for each and every alien so landed or brought in or attempted to be landed or brought in."
(Emphasis added.) 39 Stat. 880, 8 U.S.C. § 144.
Appellee and another were indicted for concealing and harboring five named aliens in alleged violation of § 8. Before trial, appellee moved that the indictment be dismissed on the ground that it did not charge a punishable offense. He argued that, although the statute provided for two different crimes, one landing or bringing in unauthorized aliens and the other concealing or harboring such aliens, punishment was prescribed in terms only for the former crime. The District Court accepted this argument and granted the motion to dismiss. The Government appealed directly to this Court pursuant to the Criminal Appeals Act, 28 U.S.C. § 345, and we noted probable jurisdiction.
inconsistent answers on the statute's wording. Furthermore, as will appear, the legislative history is neither clear nor greatly helpful in ascertaining which of the possibilities calling for punishment was the one Congress contemplated.
Before discussing specifically the alternatives, we note that the Government rests primarily on the clarity with which § 8 indicates Congress' purpose to make concealing or harboring criminal, rather than upon any like indication of legislative intent concerning the penalty. [Footnote 1] Because the purpose to proscribe the conduct is clear, it is said, we should not allow that purpose to fail because of ambiguity concerning the penalty. Rather, we are asked to make it effective by applying that one of the possibilities which seems most nearly to accord with the criminal proscription and the terms of the penalizing provision.
of judicially construing statutes [Footnote 3] and, if attempted, would require this Court to invade the legislative function and, in effect, fix the penalty. The argument is therefore not merely that a rule of strict construction should be applied in petitioner's favor. It is, rather, that the choice the Government asks us to make is so broad and so deep, resting among such equally tenable though inconsistent possibilities, that we have no business to make it at all.
Even in criminal matters a strong case would be required to bring about the result appellee seeks. For, where Congress has exhibited clearly the purpose to proscribe conduct within its power to make criminal and has not altogether omitted provision for penalty, every reasonable presumption attaches to the proscription to require the courts to make it effective in accord with the evident purpose. This is as true of penalty provisions as it is of others. United States v. Brown, 333 U. S. 18.
and that of filling gaps so large that doing so becomes essentially legislative, is necessarily one of degree.
We turn, then, to consider whether the Government is asking that we do too much when it puts forward a preferred reading of the penal provision, perhaps suggests another as a permissible alternative, and is prepared to accept a third, though disavowing its complete consistency with Congress' intent, if neither of the others is adopted.
This construction is admittedly ungrammatical, and the failure to integrate the wording of the "each and every alien" clause with the language of the 1917 amendment adding the concealing and harboring offenses is conceded to have been possibly due to oversight.
If only imperfect grammar stood in the way, the construction might be accepted. But we agree with appellee that more is involved. The Government, in effect, concedes that, in terms, the section prescribes no penalty for concealing or harboring. But it argues that inclusion of them as offenses becomes meaningless unless the penalty provision, in spite of its wording, is construed to apply to them as well as to bringing in or landing. In other words, because Congress intended to authorize punishment, but failed to do so, probably as a result of oversight, we should plug the hole in the statute.
To do this would be to go very far indeed, upon the sheer wording of the section. For it would mean, in effect, that we would add to the concluding clause the words which the Government's reading inserts, "and for each and every alien so concealed or harbored." It is possible that Congress may have intended this. But, for more than one reason, we cannot be sure of that fact.
to apply to concealing or harboring of aliens lawfully admitted but unlawfully remaining within the country.
In that event an innkeeper furnishing lodging to an alien lawfully coming in, but unlawfully overstaying his visa, would be guilty of harboring, if he knew of the illegal remaining. And, with him, one harboring an alien known to have entered illegally at some earlier, even remote, time would incur the penalties provided for smuggling, if the Government's position giving implied extension of the penalty provision were accepted.
We do not mention these possibilities to intimate opinion concerning the reach of the statute with reference to covering them, for no such question is squarely before us. But we point them out because they are relevant to the problem of assurance or reasonable certainty in asserting that Congress by necessary implication intended to extend the penalties originally and still clearly provided for smuggling to all offenses covered by the language defining the crimes.
if the two are distinct, might require, in any sound legislative judgment, very different penalties from those designed to prevent or discourage smuggling in its various phases. That is essentially the sort of judgment legislatures, rather than courts, should make.
manner for the definition and specification of the criminal acts, in order to make a judicial determination of the scope and character of the penalty.
to insert. These efforts were made as conflicting judicial decisions demonstrated that the courts were very much at sea, [Footnote 11] and their floundering was brought to congressional attention. [Footnote 12] In each instance, nevertheless, the effort was unsuccessful.
It may well be, as the Government infers, that this only increases the mystery of Congress' failure to include explicit penalties when it added the new offenses. It is possible that Congress may have thought none was needed. But that view hardly explains satisfactorily the subsequent repeated failures to clarify the matter after experience had shown that need. We cannot take them as importing clear direction to the courts to do what Congress itself either refused or failed on notice to do upon so many occasions and importunities.
already discussed, which would extend the smuggling penalties to the section's broadest possible construction in relation to definition and coverage of criminal acts, i.e., to concealing or harboring of aliens lawfully admitted but unlawfully remaining. But appellee regards this as a tendered possibility, and specified statements in the Government's brief appear to sustain his view. [Footnote 13] Whether appellee is correct in taking the statements as suggesting an independent alternative or, on the other hand, they were made, though not accurately phrased for the purpose, in support of the Government's preferred position is not greatly material. For, in any event, what has been said about extending the penalty to include the narrower range of forbidden acts applies to the broader one with even greater force as calling for the extension's rejection.
to the number of aliens involved, for one class of offenders, but not for the other. The construction, like the preferred one, is a construction of necessity, to be justified, if at all, only by the fact that, without it, the statute becomes unenforceable for the offenses of concealing or harboring.
If there were less inconsistency among the tentative possibilities put forward, or greater consistency with the section's wording implicit in one, resolution of the difficulty by judicial action would involve a less wide departure from the common function of judicial interpretation of statutes than is actually required by this case. But here, the task is too large. With both of the parties, we agree that Congress meant to make criminal and to punish acts of concealing or harboring. But we do not know -- we can only guess with too large a degree of uncertainty -- which one of the several possible constructions Congress thought to apply. The uncertainty extends not only to the inconsistent penalties said to satisfy the section, either grammatically or substantively, if not grammatically. It also includes within varying ranges at least possible, and we think substantial, doubt over the section's reach to bring in very different acts which conceivably might be held to be concealing or harboring. The latter ambiguity affects the former, and their sum makes a task for us which, at best, could be only guesswork.
Since the issues arise on dismissal of the indictment, which charges both concealing and harboring, as well as attempt to conceal and harbor, we are not asked to determine whether "conceal or harbor" as used in § 8 specifies only one offense or two distinct ones, or, if the latter, the difference between the two. Cf. notes 7 and 8 infra, and text.
Section 8 as enacted originally in 1907, 34 Stat. 900, covered only bringing in or landing and attempts to bring in or land. The prohibition of concealing or harboring and of attempting to conceal or harbor was added by amendment in 1917. 39 Stat. 880.
Indeed, appellee asserts that the words of § 8 are unambiguously to the effect that fine and imprisonment are to be imposed "for each and every alien so landed or brought in . . . ," not "for each and every alien so concealed or harbored." This view regards the concluding "for each and every alien" clause as an integral and inseparable part of the penalty provision for all offenses punishable under the section.
United States v. Hudson and Goodwin, 7 Cranch 32; United States v. Britton, 108 U. S. 199; United States v. Eaton, 144 U. S. 677; Viereck v. United States, 318 U. S. 236, 318 U. S. 241, 318 U. S. 243-244.
"such new provisions as are included are merely to complete the definition of the crime of smuggling aliens into the United States and related offenses. . . ."
Sen.Rep. No. 352, 64th Cong., 1st Sess. 9.
There is no indication of the degree or character of the relation suggested by the words "and related offenses," see the preceding note, with reference to the proximity of the acts proscribed, in time and place, to smuggling operations.
"which said alien persons then and there were aliens not duly admitted to the United States by an immigrant inspector and not lawfully entitled to enter or reside in the United States. . . ."
Even if this use of the conjunctive in place of the statutory disjunctive, see text of § 8 quoted at the beginning of this opinion, would prevent applying this indictment to a case involving no illegal entry, but only illegal remaining, that fact would not prevent the drafting of other indictments to cover such cases or perhaps amending this one to give it the disjunctive effect. These possibilities are as pertinent to whether the suggested penal extension should be made as if actually presented on the indictment in its present form.
The indictment not only conjoins illegal remaining with illegal entry, cf. note 7 but charges that petitioner concealed and harbored aliens "not duly admitted . . . and not lawfully entitled to enter or reside. . . ." Thus, the specific charge in this case cannot be said to be limited to smuggling, for no wording of the statute relating to bringing in or landing is included. Such a limitation could be read into the indictment only by now declaring the statute to be limited as a whole to acts constituting part of the smuggling process.
"for each and every alien so landed or brought in or attempted to be landed or brought in, or so concealed or harbored, or with respect to whom there has been such an attempt to conceal or harbor, or assisting or abetting another to conceal or harbor."
See Annual Report for 1909 of the Commissioner General of Immigration, 168. The simple clause "for each and every alien to whom this section is applicable" was substituted in the bill proposed in the annual report for 1910. (P. 170.) In 1911, a bill incorporating many of the Commissioner General's suggested amendments to the Act was introduced, but the penalty provisions of § 8 were not made applicable to concealing or harboring. S. 3175, 62d Cong., 2d Sess. This omission was not corrected in the subsequent drafts that eventually resulted in the 1917 statute. See H.R. 6060, 63d Cong., 2d sess.; H.R. 10384, 64th Cong., 1st Sess.
In his 1931 and 1932 annual reports, the Commissioner General specifically pointed out that an amendment to § 8 was necessary because it had been interpreted to provide no penalty for the offense of concealing and harboring. A bill introduced in the House of Representatives in 1934, but not enacted, included an amendment to § 8 to make the penalty apply "for each and every alien in respect to whom any of the foregoing offenses have occurred." H.R. 9366, 73d Cong., 2d Sess. At the hearings on this bill, the Deputy Commissioner expressly pointed out that the amendment was designed "to make sure that there will be no question that we can inflict this penalty for concealing a smuggled alien." Hearings before the House Committee on Immigration and Naturalization on H.R. 9366, 73d Cong., 2d Sess. 22.
In 1940, the general problem was again before Congress when it was made unlawful to stow away in order to facilitate entry into the United States or to aid or abet a stowaway, 54 Stat. 306, and again when the Act was amended to authorize the deportation of any alien who, knowingly and for gain, encouraged, induced or assisted another alien to effect an unlawful entry. 54 Stat. 671.
See hearings before the House Committee on Immigration and Naturalization on H.R. 9366, 73d Cong., 2d Sess. 22.
"We submit, therefore, that a proper reading of Section 8 in the light of the legislative history can leave no doubt of Congress' intention that the penal provisions should apply to the offense of concealing or harboring an alien not duly admitted or not lawfully entitled to enter or reside within the United States."
This was the view taken in Mediros v. Keville, 63 F.2d 187, by the Circuit Court of Appeals for the First Circuit, which appears to be the only appellate decision on the matter. The Government successfully opposed the granting of certiorari in that case, although consistently with its present preferred position it now asserts that, contrary to the ruling, the congressional intent to punish concealing and harboring proportionately to the number of aliens involved is "equally as clear as the intent to make those offenses punishable at all."
In response to petitioner's suggestion of inconsistency between that position and the one now taken, the Government points out that its brief in opposition also urged that the Medeiros decision was, in any event, correct on other grounds.
Indeed, it was in effect reinforced by the 1917 amendment. For that amendment not only added the new offenses, but substantially increased the maxima of the authorized fine and imprisonment. Congress thus gave specific attention to the penal provision in addition to expanding the criminal acts, and, in this respect, followed the Commissioner General's recommendation. Yet it declined at the same time to alter the "for each and every alien" clause, which he also asked to have changed.


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ISETANN DEPARTMENT STORE, INC., Petitioner, v. THE NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION and ROSITA BAUTISTA, Respondents.
Batino, Angala, Salud & Fabia Law Offices for Petitioner.
Emmanuel G. Fule for Private Respondent.
We agree with this assessment.
The switch in figures was discovered sometime in July, 1987 when the shoes were transferred to petitioner’s Cubao branch. The purchase order was cancelled and a new check for the correct amount of P53,838.00 was prepared and paid to Yolanda Chan, who continued to supply shoes to petitioner until September, 1987. When confronted with the error by Alice Luro, Buyer, and Mr. K. C. Tan, Merchandiser, Mangoba admitted her mistake in sorting out the shoes and in preparing the purchase order.
Rule XIV — Sec. 2.	Bribery or offering or accepting anything of value in exchange for a job. work, assignment, work location, or favorable condition or employment.
Rule XIV — Sec. 32.	Engaging or conniving in anomalous transactions.
Rule XVIII — Sec. 9.	Using Company time, or materials or equipment to do unauthorized work within or without the Company premises for personal gain.
Bautista contested her dismissal through a complaint filed before the NLRC NCR Arbitration Branch. No amicable settlement having been reached, hearing on the merits ensued.
On July 31, 1989, Labor Arbiter Felipe P. Pati rendered judgment "ordering the respondent (Isetann) to reinstate the complainant to her former position without loss of seniority rights and to pay her full backwages and other benefits from the time she was illegally dismissed until actual reinstatement plus ten (10) percent of the total award as Attorney’s fees payable to counsel." 6 The Labor Arbiter ruled that no fraud or anomaly attended the accomplishment of the purchase order of Chan’s June 2, 1987 shoe delivery but only an error in its preparation as admitted by Mangoba when first confronted therewith. No credence was given to the testimonies of Capua and Mangoba that they were instructed by private respondent to mix the shoes to avoid loss on the part of chan because nobody would "agree to outrightly transact or enter into a losing proposition or business" and Chan herself testified that she would already be getting a marginal profit from the correct price of the shoes. Moreover, Arbiter Pati noted that petitioner’s own version that the anomaly was discovered in July, 1987 was irreconcilable with the fact that Chan was paid the correct amount as early as June, 1987 and she was still allowed to supply shoes to petitioner until September 1987. In fine, the Labor Arbiter concluded that petitioner Isetann had failed to substantiate the charges imputed to private respondent and that there was no basis for her dismissal on the ground of loss of trust and confidence.
In the petition at bar, petitioner assails the affirmance by the NLRC of the Labor Arbiter’s decision as constituting grave abuse of discretion because the Arbiter not only failed to accord due weight to petitioner’s testimonial and documentary evidence, but more importantly, misapprehended the same, thereby drawing conclusions that were entirely incongruent and fallacious.
In the case at bar, Bautista’s involvement in the anomaly complained of was sufficiently shown by the corroborating testimonies of Capua and Mangoba. Both the Labor Arbiter and the NLRC gravely abused their discretion in rejecting said testimonies, acting as they did under gross misapprehension of facts. No contradiction arises from the fact of payment on June 29, 1987 and petitioner’s witnesses’ statement that the anomaly was discovered in July or November of the same year. What was discovered in July was only the switch of figures in the purchase order then ascribed to nothing more than inattention or carelessness. It was not until November, when Mangoba executed her written statement, that respondent Bautista’s hand in said interchanging was discovered. Only then when what appeared to be a mere error in the preparation of the purchase order was revealed to be a aborted fraudulent scheme involving private Respondent. Thus, it was likewise not illogical that Chan continued to supply shoes to petitioner until September.
Another reason given by the Labor Arbiter for rejecting the testimonies of Capua and Mangoba is that nobody would "agree to outrightly transact or enter into a losing proposition or business." 8 This exemplifies what petitioner terms an incongruous and fallacious conclusion. Whether or not Chan really stood to lose in the transaction if no switch in figures was made is immaterial. What matter is not the truth or falsity of that statement, but rather that this was the reason given by private respondent in urging and convincing Capua to fraudulently mix the "Valencia" with deerskin shoes.
Q	Madam witness, in your statement you stated therein and I quote the last paragraph.’Sana po ay maunawaan po ninyo ang aking katayuan sa hindi ko po pagtatapat kaagad.’ What do you mean by the term ‘katayuan’?
WHEREFORE, the petition is hereby GRANTED. The assailed Resolution of the NLRC Second Division, and decision of the Labor Arbiter are ANNULLED and SET ASIDE, and private petitioner’s complaint for illegal termination of employment DISMISSED.
Padilla, Regalado, Nocon and Puno, JJ., concur.
1.	Composed of Presiding Commissioner Edna Bonto Perez, Commissioners Rustico L. Diokno (Ponente) and Domingo H. Zapata.
2.	Petition, p. 8, Rollo, p. 9.
3.	Annex "B", Petition, Rollo, pp. 36-42.
4.	Annex "C", Petition, Rollo, pp. 43-46.
5.	Annex "F", Petition, Rollo, p. 53.
6.	Annex "I", Petition, Rollo, pp. 77-78.
7.	Top Form Mfg. Co. Inc. v. NLRC, G. R. No. 6655706, December 11, 1992, 216 SCRA 313; citing Valladolid v. Inciong, 121 SCRA 205 ; DOLE Philippines, Inc. v. NLRC, 123 SCRA 673 ; Ocean Terminal Services, Inc. v. NLRC, 197 SCRA 491 ; Baguio Country Club Corporation v. NLRC and GENOVE, G. R. No. 102397, September 4, 1992.
8.	p. 6, Labor Arbiter’s Decision, Annex "I", Petition, p. 76, Rollo.
9.	TSN, p. 32, April 25, 1988; Italics supplied.
10.	page 9, NLRC Resolution, Annex "A", Petition, p. 35, Rollo.

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Good morning everyone, and thank you, Carl, for that kind introduction and for inviting me to speak here today. Before I begin, let me remind you that the views I express are my own and do not necessarily reflect the views of the Commission, any of the Commissioners, or any other colleague on the staff of the Commission.
I am excited to be here to deliver the keynote address at this important conference on compliance and other issues affecting investment advisers. I am joined today by several of my colleagues from around the Commission — including from the Commission’s Office of Compliance Inspections and Examinations (OCIE) Director Drew Bowden, Deputy Director Marc Wyatt, National Associate Directors Jane Jarcho (Investment Adviser/Investment Company) and Kevin Goodman (Broker-Dealer), and Assistant Director Mavis Kelly, and from the Division of Investment Management Associate Director Diane Blizzard and Assistant Director Dan Kahl — all of whom will be speaking at the conference. It is an honor to be here alongside some of the Commission’s most experienced and talented staff.
Today I will discuss the AMU’s evolution over the past five years, our coordination and collaboration with our colleagues in OCIE and in the Division of Investment Management, the AMU’s 2015 priorities, and then spend a few minutes touching on the AMU’s overarching concern — conflicts of interest.
The Asset Management Unit just turned five years old, and, as with any milestone birthday, this is a natural time to reflect on where the Unit has been and what we see on the horizon. The AMU today consists of approximately 75 professionals, now in all 12 SEC offices. Our focus is investigating potential misconduct involving registered investment companies, private funds (both hedge funds and private equity funds), and separately managed accounts and retail accounts. Working side-by-side with our attorneys are seven former industry professionals who have enhanced the manner and speed at which we are able to target risk areas and investigate potential misconduct. Among these experts are former mutual fund professionals with extensive experience in the marketing, distribution, and servicing of mutual funds, including 12b-1 fees and board governance issues (such as the 15(c) process) and former hedge fund and private equity professionals with portfolio management and due diligence experience. One is a former FBI agent. As a group, they have done and seen it all, from go-anywhere equities trading to algorithmic trading systems, derivatives trading, credit analysis, and bond and options trading. They assist on our cases by sharpening document requests, questioning sophisticated witnesses in testimony, and devising investigative theses and building analytics around those theses. They also conduct trainings and assist the Commission’s rulemaking divisions when a potential rule or staff guidance touches their areas of expertise. We simply could not run the AMU program without them.
The Unit’s staff is tremendously talented and highly experienced after five years of asset management specialization. Five years ago, we underwent rigorous training at inception (and renewed that training in the past year); now others around the Commission seek us out to provide training, consult on rulemaking, play leading roles on initiatives such as the Distribution in Guise sweep, and to speak at such conferences such as this one. As a result of the training and expertise, we have brought many terrific cases over the last five years: F-Squared Investments, Inc. (false performance advertising), Paradigm Capital Management, Inc. (Commission’s first case charging a firm with retaliating against a Dodd-Frank whistleblower), J. Kenneth Alderman (violations by eight former directors of Morgan Keegan mutual funds for failing to satisfy their responsibilities to determine fair value in good faith), Northern Lights Compliance Services, LLC (violations by five trustees, CCO, and administrator in investment advisory contract approval process), Oppenheimer Asset Management Inc. (adviser mislead private equity fund about valuation and performance), Harbinger Capital Partners (Commission’s first case settled with admissions), AMMB Consultant Sendirian Berhad (first Investment Company Act of 1940 Section 36(b) case in more than 30 years), and AXA Rosenberg (quantitative model error), just to name a few.
Critical to the AMU’s success over the past five years has been its constant collaboration and coordination with the Commission’s other two main stakeholders for investment adviser and investment company issues: OCIE and the Division of Investment Management.
First, the Asset Management Unit has, not surprisingly, a special relationship with the OCIE staff around the country who examine investment advisers and investment companies. We coordinate very closely with those examiners, including regularly conferring with them on emerging risks and problematic conduct they are seeing in the field and on our respective priorities year to year. The Unit also frequently collaborates with OCIE on initiatives and sweeps where our shared expertise can be most effectively leveraged. For example, most recently, AMU experts have been centrally involved in developing and conducting the Distribution in Guise and Alternative Mutual Fund sweeps.
This close coordination with OCIE is not cause for alarm. Our collaboration with exam staff is nothing new, and the Division of Enforcement has always worked many cases referred by exam staff and now, with AMU fully established, we have a group of Unit staff who understand the exam work being done in the investment adviser/investment company space and who understand the importance of regulatory violations such as compliance and custody rule violations. That said, we firmly believe that not every exam deficiency warrants an enforcement response. In fact, just the opposite: in the vast majority of cases, non-compliance will be addressed through engagement with the registrant, deficiency letters, and other approaches, short of an enforcement action. It is of course the case that a small percentage of exams result in an enforcement referral, but it is very important that exam staff have the ability to refer matters when in their judgment the conduct warrants enforcement action.
Second, the AMU is similarly closely aligned with the Commission’s Division of Investment Management. We are “repeat customers” with IM staff, who assist the AMU’s enforcement program in various ways, including helping us to evaluate complex legal issues that crop up in our investigations and reviewing our enforcement recommendations to ensure that they are consistent with Commission practice. IM staff also direct us to practices they view as problematic for possible investigation, and they consult with us and our experts when they are writing rules or contemplating issuing guidance that impacts the asset management industry. We likewise keep IM staff apprised of what we see in terms of how regulation impacts the industry and when additional guidance might be beneficial.
This three-legged stool of collaboration — AMU, OCIE, and the Division of Investment Management — has yielded tremendous results in the past five years. For example, the AMU’s successful Ambassador Capital Management enforcement case originated from an OCIE examination that in turn was generated by ongoing analysis of money market fund data by IM staff that involved a review of the gross yield of funds as a marker of risk. In addition, the Unit’s Fund Fee Initiative, which I will discuss more in a moment, is a coordinated effort by AMU, the Division of Investment Management, and OCIE to examine fee arrangements involving registered funds, their advisers, and boards of directors.
And, if I were going to stretch the metaphor, I would change the furniture from a stool to a chair, and add a leg for the Division of Economic and Risk Analysis (DERA) because the Unit works very closely with DERA in devising and conducting risk-analytic initiatives, including the Aberrational Performance Inquiry, in which we use proprietary risk analytics to identify hedge funds with suspicious returns, and our Cherry-Picking Initiative, in which we are using big data to identify unlawful preferential trade allocations.
I want to touch on the AMU’s 2015 priorities, and then spend time talking more expansively about one overarching, perennial priority — conflicts of interest — that should be of concern to everyone in this room. The Unit roughly divides the vast asset management industry it polices into three primary categories by investment vehicle: registered investment companies, private funds (both hedge funds and private equity funds), and other accounts (e.g., separately managed accounts/retail accounts). Each vehicle presents unique risks, and naturally our enforcement priorities differ somewhat as to each.
For registered investment companies, the Unit’s 2015 priorities include valuation and performance and the advertising of that performance; funds deviating from their investment guidelines or pursuing undisclosed strategies; fund governance, which includes boards’ and advisers’ discharging of their obligations under Section 15(c) of the Investment Company Act of 1940 (“Investment Company Act”) when they evaluate advisory and other types of fee arrangements; and fund distribution, including whether advisers are causing funds to violate Rule 12b-1 by using fund assets to make distribution payments to intermediaries outside of the funds’ Rule 12b-1 plan, whether funds’ boards are aware of such payments, and how such payments are disclosed to shareholders. Fund distribution is of particular concern given the conflicts of interest it presents for the adviser — i.e., whether to use its own assets or fund assets to distribute shares. We brought a number of cases in these areas in 2014. For example, in the fund governance area, building on the Unit’s prior 15(c) cases, we brought a fourth case as part of our Fund Fee Initiative, in which we examine whether advisers made misrepresentations to boards about services provided and fees received. In that fourth case, Chariot Advisors, LLC, we charged an adviser with Section 15(c) violations for misrepresenting to the fund’s board of trustees the adviser’s ability to engage in algorithmic currency trading. And, in December 2014 we brought the F-Squared case, in which we charged an adviser to managed ETF portfolios with approximately $29 billion in AUM with advertising a materially inflated, and hypothetical and back-tested, performance track record. To settle the case, the firm paid $35 million and made admissions; the firm’s co-founder and former CEO Howard Present is litigating. I include this case under the registered investment company category because the Commission’s order found that F-Squared, among other things, caused violations of Section 34(b) of the Investment Company Act because various mutual funds for which it serves as a sub-adviser included F-Squared’s false historical performance numbers in their own Commission filings. In 2015, we anticipate additional performance advertising and 15(c) cases, along with cases in all of these priority areas.
For private funds — meaning hedge funds and private equity funds — the AMU’s 2015 priorities include conflicts of interest, valuation, and compliance and controls. On the horizon, on the hedge fund side, we anticipate cases involving undisclosed fees; all types of undisclosed conflicts, including related-party transactions; and valuation issues, including use of friendly broker marks. We also continue to refine the analytics for the AMU’s signature risk initiative, the Aberrational Performance Inquiry, or API, which uses proprietary risk analytics to identify hedge funds with suspicious returns. In 2014, the Enforcement Division brought its eighth case generated by API. On the private equity side, the AMU continues to work very closely with the exam staff and we expect to see more undisclosed and misallocated fee and expense cases like the Clean Energy Capital and Lincolnshire Management, Inc. cases we brought in 2014.
For other client accounts (e.g., separately managed accounts and/or retail accounts) — and recognizing that the following is doing rough justice to very different types of accounts — the Unit’s 2015 priorities include conflicts of interest, fee arrangements, and compliance. Leaving aside conflicts for a moment, the Unit brought a number of fee arrangements cases in 2014, including Transamerica Financial Advisors, Inc., in which we charged a firm with failing to aggregate accounts for purposes of applying breakpoint discounts. The case also highlighted a compliance theme — recidivism — because the firm had been told by OCIE after a branch exam that it might have a firm-wide aggregation issue, but Transamerica never undertook a global review. On the compliance front, the AMU brought a number of additional cases as part of our Compliance Program Initiative, a joint effort with OCIE to identify advisory firms that lack effective compliance programs for possible enforcement action. The goal is to drive firms to address repeated or systemic compliance failures that may lead to bigger problems, so the Initiative targets firms that have been previously warned by SEC examiners about compliance deficiencies but failed to effectively act upon those warnings, or firms that have wide-ranging compliance failures. To date, we have brought eleven cases, including most recently against Barclays Capital, Inc., where we found systemic compliance failures after the firm acquired an advisory business for the first time from Lehman in 2008. In addition, we are still focused on Custody Rule violations, as is exam staff.
Now a few words about one of the Asset Management Unit’s overarching concerns across all of the investment vehicles: conflicts of interest. In reality, conflicts of interest is the risk area into which nearly all of the more granular priorities I just mentioned fall. In nearly every ongoing matter in the Asset Management Unit, we are examining, at least in part, whether the adviser in question has discharged its fiduciary obligation to identify its conflicts of interest and either (1) eliminate them, or (2) mitigate them and disclose their existence to boards or investors. Over and over again we see advisers failing properly to identify and then address their conflicts.
The Court in Capital Gains stated that the types of conflicts of interest encompassed by the Advisers Act include instances where there is a facial incompatibility of interests, as well as any situation where an adviser’s interests might potentially incline the adviser to act in a way that places its interests above clients’ interests, intentionally or otherwise. There is, therefore, no exception to disclosure: no “well-meaning or good-faith adviser” exception for an adviser that legitimately believes it is putting its clients’ interests first notwithstanding any conflicts; no “mitigation” exception for an adviser that believes it has taken adequate internal measures to account for potentially incompatible interests; and no “potential conflict” exception for an adviser that did not act upon the conflict to enrich itself at the expense of its clients.
An adviser’s failure to disclose conflicts of interest to clients subjects it to possible enforcement action. Because disinterested investment advice — or, alternatively, clients’ knowledge of any conflicts that might render their adviser’s advice not disinterested — is at the heart of advisers’ fiduciary relationship with clients, the Asset Management Unit has aggressively pursued enforcement cases where appropriate. We brought a number of significant conflicts cases this year, and more are in the pipeline.
On the registered fund side, we are intensely focused on conflicts of interest. We brought several cases in fiscal year 2014 in which we alleged that advisers to registered investment companies failed to seek to obtain best execution for their fund clients. In the Manarin Investment Counsel case, we charged an adviser to three funds-of-funds with breaching its fiduciary duty by failing to seek best execution when it caused those funds to buy Class A shares of underlying mutual funds when the funds were eligible to own lower cost “institutional” shares of the mutual funds. As a result, private fund of fund clients paid more than $600,000 in avoidable Rule 12b-1 fees on their mutual fund holdings, which were passed through to the adviser’s affiliated broker-dealer.
Likewise in the private equity fund arena, we continue to focus on the inherent conflicts in various fee and expense arrangements. In 2014, we brought our first two cases in this area. In the Clean Energy Capital case, we alleged that the adviser misallocated its expenses to funds it managed — including a majority of the principal’s compensation. The money taken from the funds for the adviser’s expenses was in addition to millions of dollars in management fees the fund was already paying. In the Lincolnshire Management Inc. case, we alleged that a private equity adviser misallocated expenses between two portfolio companies owned by separate funds it managed.
Conflicts of interest are similarly rife in the RIA space, including improper principal transactions (like those in the Paradigm case), best execution involving affiliated broker-dealers, and undisclosed compensation arrangements. To address certain of these conflicts, the Unit, in collaboration with exam staff, developed its Undisclosed Adviser Revenue risk-analytic initiative, which targets undisclosed compensation arrangements between investment advisers and brokers that result in potentially tainted investment advice. In the most recent case, from January 2015, we alleged in Shelton Financial Group Inc. that an investment adviser failed to properly disclose compensation it received from a broker-dealer for investing client assets in certain no transaction fee mutual funds, thus creating incentives for the adviser to recommend certain funds to its clients.
On the horizon, we expect to recommend a number of conflicts cases for enforcement action, including matters involving best execution failures in the share class context, undisclosed outside business activities, related-party transactions, fee and expense misallocation issues in the private fund context, and undisclosed bias toward proprietary products and investments. We also anticipate enforcement action from the Distribution in Guise Initiative, where we are examining, among other things, conflicts presented by registered fund advisers using the fund’s assets to grow the fund and, consequently, the adviser’s own fee.
To fulfill their obligations as fiduciaries, and to avoid enforcement action, advisers must identify, and then address — through elimination or disclosure — those conflicts. There are many ways to do that, but among others, and at a very high level: Take a step back and rigorously and objectively evaluate your firm, its personnel, its business, its various fee structures, and its affiliates. Is the firm a dually registered investment adviser and broker-dealer, or does the adviser have an affiliated broker-dealer? If so, the firm will have inherent conflicts risks if it engages in principal transactions or trades through its brokerage arm or an affiliated broker-dealer. Does the firm manage clients side-by-side? If so, and if the firm’s clients are funds, do they engage in inter-fund lending or investing? Does the firm receive compensation from any third parties for recommending investments or using certain service providers? Does it engage in proprietary trading or investing? If so, has the firm disclosed its potential biases and that its investment advice could be tainted by compensation received from any third parties or from proprietary investing?
For each conflict identified, as a threshold matter, can the conflict be eliminated? If not, why not? If the adviser cannot, or chooses not to, eliminate the conflict, has the firm mitigated the conflict and disclosed it? Is there someone — a person, a few individuals, a committee — at the firm responsible for evaluating and deciding how to address conflicts? Is that person or individuals or committee sufficiently objective? Is the process used to evaluate and address conflicts designed to be objective and consistent? Does the firm have policies and procedures in place to identify new conflicts and monitor and continually re-evaluate ongoing conflicts? As to mitigation, are the firm’s policies and procedures reasonably designed to address the conflicts the firm has identified, and are they properly implemented?
As to written disclosure, has the firm reviewed all of the relevant disclosure documents — among others, Forms ADV, private placement memoranda, limited partnership agreements, client agreements, prospectuses — to ensure that all conflicts are disclosed, and disclosed in a manner that allows clients or investors to understand the conflict, its magnitude, and the particular risk it presents? Does the firm review those documents regularly to ensure that new or emerging conflicts are disclosed in a timely way? Further to disclosure, is the adviser keeping the chief compliance officer and boards of directors (if any) informed about conflicts of interests, particularly the adviser’s analysis and decisions on whether to eliminate or mitigate a conflict?
Only through complete and timely disclosure can advisers, as fiduciaries, discharge their obligation to put their clients’ and investors’ interests ahead of their own.
In conclusion, I appreciate the opportunity to share my thoughts on these critically important conflicts issues and on the work of the Asset Management Unit within the Division of Enforcement. Thank you very much and enjoy the rest of the conference.
 The U.S. Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the author’s colleagues on the staff of the Commission.
 In re F-Squared Investments, Inc. (Dec. 22, 2014).
 In re Paradigm Capital Management, Inc. et al. (June 16, 2014).
 In re J. Kenneth Alderman, CPA et al. (June 13, 2013).
 In re Northern Lights Compliance Services, LLC et al. (May 2, 2013).
 Oppenheimer Asset Management Inc. (Mar. 11, 2013); see also In re Brian Williamson (Aug. 20, 2013).
 SEC v. AMMB Consultant Serdirian Berhad (D.D.C. filed June 26, 2012).
 In re AXA Rosenberg Group LLC et al. (Feb. 3, 2011).
 In re Further Lane Asset Management, LLC et al. (Oct. 28, 2013); In re GW & Wade, LLC (Oct. 28, 2013); In re Knelman Asset Management Group, LLC et al. (Oct. 28, 2013).
 In re Ambassador Capital Management, LLC et al. (Initial Decision Sept. 19, 2014).
 In re Northern Lights Compliance Services, LLC et al. (May 2, 2013); SEC v. AMMB Consultant Serdirian Berhad (D.D.C. filed June 26, 2012); In re Morgan Stanley Investment Management Inc. (Nov. 16, 2011).
 In re Chariot Advisors, LLC et al. (July 3, 2014).
 In re GLG Partners, Inc. et al. (Dec. 12, 2013). The other seven cases brought to date are: SEC v. Yorkville Advisors, LLC et al. (S.D.N.Y. filed Oct. 17, 2012); SEC v. Balboa et al. (S.D.N.Y. filed Dec. 1, 2011); SEC v. Rooney et al. (N.D. Ill. filed Nov. 18, 2011); In re LeadDog Capital Markets, LLC et al. (Nov. 18, 2011) (Initial Decision Sept. 14, 2012; SEC v. Kapur et al. (S.D.N.Y. filed Nov. 18, 2011); SEC v. Reid et al. (S.D. Ga. filed Feb. 1, 2011); SEC v. Neufeld et al. (N.D. Ill. filed Apr. 19, 2010).
 In re Transamerica Financial Advisors, Inc. (Apr. 3, 2014).
 In re Barclays Capital Inc. (Sept. 23, 2014).
 SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (1963) (“Capital Gains”).
 Id. at 191-92 (emphasis added) (footnote omitted). This formulation has been followed consistently by the courts. See, e.g., SEC v. DiBella, 587 F.3d 553, 567 (2d Cir. 2009); Monetta Financial Services, Inc. v. SEC, 390 F.3d 952, 955-56 (7th Cir. 2004); SEC v. Wall St. Transcript Corp., 422 F.2d 1371, 1376 (2d Cir. 1970); SEC v. K.W. Brown and Co., 555 F. Supp. 2d 1275, 1305 (S.D. Fla. 2007).
 Capital Gains, 375 U.S. at 196 (citing United States v. Mississippi Valley Generating Co., 364 U.S. 520 (1961)); id. at 196 n.50 (“‘The reason of the rule inhibiting a party who occupies confidential and fiduciary relations toward another from assuming antagonistic positions to his principal in matters involving the subject matter of the trust is sometimes said to rest in a sound public policy, but it also is justified in a recognition of the authoritative declaration that no man can serve two masters; and considering that human nature must be dealt with, the rule does not stop with actual violations of such trust relations, but includes within its purpose the removal of any temptation to violate them.’” (citation omitted)); Vernazza v. SEC, 327 F.3d 851, 859 (9th Cir. 2003) (“It is indisputable that potential conflicts of interest are ‘material’ facts with respect to clients and the Commission.”); see also K.W. Brown and Co., 555 F. Supp. 2d at 1305 (“The existence of a conflict of interest is a material fact which an investment adviser must disclose to its clients….”).
 The Supreme Court in Capital Gains rejected the argument that advisers are not liable under Section 206 for failing to disclose conflicts of interest where their advice to their clients “was ‘honest’ in the sense that they believed it was sound and did not offer it for the purpose of furthering personal pecuniary objectives.” 375 U.S. at 200.
 In re Feeley & Willcox Asset Management Corp. et al., Admin. Proceeding File No. 3-9571, 2003 WL 22680907, at *13 (July 10, 2003) (Commission opinion) (“It is the client, not the adviser, who is entitled to make the determination whether to waive the adviser’s conflict. Of course, if the adviser does not disclose the conflict, the client has no opportunity to evaluate, much less waive, the conflict.”).
 Vernazza, 327 F.3d at 858-59. The Supreme Court in Capital Gains held that “[i]t is the practice itself … with its potential for abuse, which ‘operates as a fraud or deceit’ within the meaning of the Act when relevant information is suppressed. The Investment Advisers Act of 1940 was ‘directed not only at dishonor, but also at conduct that tempts dishonor.’” 375 U.S. at 200 (citing Mississippi Valley Generating Co., 364 U.S. at 549). The courts have consistently held that the failure to disclose the existence of incentives that could predispose an advisor to act contrary to the clients’ interests is itself a violation. See, e.g., Monetta Financial Services, Inc., 390 F.3d at 955-56 (affirming in relevant part Commission order that adviser violated Section 206(2) and noting fact that it “did not, in fact, favor [certain directors of its mutual fund clients in allocating IPO shares] over the funds is of no consequence because the potential for abuse nonetheless existed”) (citing Capital Gains, 375 U.S. at 191-92); Steadman v. SEC, 603 F.2d 1126, 1130 (5th Cir. 1979) (rejecting defendant’s argument that “actual” conflict of interest was required to meet the materiality requirement enunciated in TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976), and holding that a “potential” conflict of interest was sufficient).
had a duty to disclose any potential conflicts of interest accurately and completely, and to recognize that [what amount to a referral fee agreement] created such a potential conflict. . . . In this case  the Commission was entitled to conclude that any competent investment adviser would have recognized that the [agreement] created such a potential conflict, and that the [advisers’] failure to identify the conflict was either knowingly or recklessly in disregard of their duties.”).
 In re Manarin Investment Counsel, Ltd. et al. (Oct. 2, 2013).
 The Commission brought a number of cases in FY2014 in which it charged advisers with violations of Section 206(3) for engaging in improper principal transactions. See, e.g., In re Strategic Capital Group, LLC et al. (Sept. 18, 2014); In re Clean Energy Capital, LLC et al. (Oct. 17, 2014); In re Paradigm Capital Management, Inc. et al. (June 16, 2014); In re Parallax Investments, LLC et al. (Nov. 26, 2013); In re Tri-Star Advisors, Inc. et al. (Nov. 26, 2013); In re Further Lane Asset Management, LLC et al. (Oct. 28, 2013).
 In re Clean Energy Capital, LLC et al. (Oct. 17, 2014).
 In re Lincolnshire Management, Inc. (Sept. 22, 2014).
 In re Shelton Financial Group, Inc. (Jan. 13, 2015); see also In re The Robare Group, Ltd. et al. (Sept. 2, 2014); In re Focus Point Solutions, Inc. (Sept. 6, 2012).
 Form ADV was amended in 2010 and these amendments require most Commission-registered advisers to file and to start using client disclosure brochures that meet the requirements of new Part 2A as of 2011. See Advisers Act Rel. No. 3060 (July 28, 2010). Item 14A of the new Form ADV Part 2A requires disclosure of an adviser’s receipt of economic benefits from non-clients for providing investment advice or other advisory services to clients as well as the resulting conflicts and how the firm addresses them.

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This post is a continuation of Statistics in the Triad, Part I: Geometric Mean. The two are meant to be read sequentially, since the mathematical elements of the first are an important and inescapable prerequisite for the second. If you already have a working knowledge of the geometric mean, however, and how its use differs from that of the ubiquitous arithmetic mean, then you can just read on.
The fundamental property of a triad or ternary plot that requires special consideration when applying statistics is its constant-sum or closure constraint. In a SenseMaker project, the data automatically sum to 100% when a respondent clicks or places a marker inside the triad on a collector screen; or the results are normalized (see Part I) if the respondent otherwise enters numerical values for each of the three components (vertices), which are then divided by the sum of the three values to yield percentages.
This results in a loss of one degree of freedom, which means that if one of the variables is changed, the combination of the other two must necessarily change as well, but in the opposite direction. Thus, spurious negative correlations can arise among the data that fall completely outside any interpretive, subject-matter context, such as a SenseMaker project. This problem has been recognized for more than a century (Pearson, 1897), though it did not gain widespread notice until geologists began looking for workarounds in the 1960s and 1970s, prompted by a paper by Chayes (1960). In addition, because the bounded compositional data (in the range 0 to 1) of a triad cannot have a normal distribution, any statistical method that assumes non-bounded data (typically -∞ to +∞) cannot be used, for example, factor and principal component analysis. Even the lowly arithmetic mean is suspect.
A “practical tool of analysis” came in the 1980s in a series of papers by the statistician John Aitchison, fully articulated in his 1986 book (p. 112, reprinted in 2003 with some supplementary materials): The Statistical Analysis of Compositional Data. In the subsequent three decades, there has been considerable work on clarifying and extending the theoretical underpinnings of Aitchison’s work, in particular by Vera Pawlowsky-Glahn, Juan-José Egozcue, and their collaborators. The most succinct summary of these results can be found in their 2006 paper (see References); and a more extended treatment is given in their 2015 book, Modeling and Analysis of Compositional Data. Several others among the Additional Readings are less accessible and not for the mathematically-faint-of-heart.
data points that may be available for that triad.
At a stroke, this creates two independent variables and moves the data from the closed ternary space (the “simplex”) to the domain of real numbers (-∞ to +∞), thereby eliminating spurious negative correlations and other covariance problems and opening up the transformed data to a variety of standard statistical methods. Equally important, there is an inverse transformation that allows results to be brought back to the triad for display with the original data.
The arithmetic mean calculated from (3) for the transformed data is shown as the red dot in the right-hand graph above. Not surprisingly, it falls “midway” along the distribution. The red dot is also shown in the triad. We’ll look now at how that return step, the inverse transformation, was done and the significance of the resulting point.
coordinates in the triad — also the red dot. Surprising, confusing, unsettling… but true! As Aitchison (1989, p. 789) says, this is precisely “the composition formed from [the] geometric means by the process of closure” (Aitchison, 1989, p. 789). In other words, the arithmetic mean in the log-ratio plot is identical to the geometric mean in a triad.
Although the distinction between the arithmetic and geometric means is enhanced visually when the data are in a well-defined, curved array like this, the general principle remains: the geometric mean is the appropriate “measure of location” for constant-sum data. What if the data are just an amorphous blob? It doesn’t matter — use the geometric mean! OK, but what if the data look more like a typical SenseMaker study, with respondents’ dots located near the center, near the three vertices, and along the three bisectors? It doesn’t matter — use the geometric mean, whether for the entire data set or for cohort- or signifier-defined subsets.
There is one situation, however, where careful inspection of and experimentation with data patterns might be particularly helpful. Some of the curved arrays encountered in geochemical studies of volcanic rocks have a temperature-dependence, displaying changing composition as lavas and magmas cool and crystallize. Under the broad rubric of thermodynamics, “cooling” means “passing time.” So moving “down” such a data array would, in general, be tracking time. That thought evokes SenseMaker projects employing either punctuated or continuous capture of data, where a fixed group of prompts and signifiers is used over an extended period of time. In that situation, especially if various interventions occurred in the hope of eliciting a change in behavior/response, then tracking time would be both necessary and valuable. A study that was well-designed in this regard might be the perfect way to persuade a skeptic — for example, a client who didn’t fully appreciate the wonders of the math — that the geometric mean is the right “measure of location” to use. And once demonstrated to the skeptic’s satisfaction, the point would carry over to any distinctions among data, whether temporal or demographic or cultural.
Aitchison, J. (1989) Measures of Location of Compositional Data Sets. Mathematical Geology, v. 21, p. 787-790.
Pawlowsky-Glahn, V., and Egozcue, J.J. (2006) Compositional data and their analysis: an introduction. in Buccianti, A., Mateu-Figueras, G., and Pawlowsky-Glahn, V., editors, Compositional Data Analysis in the Geosciences: From Theory to Practice, Geological Society of London, Special Publications 264, p. 1-10.
Pearson, K. (1897) Mathematical contributions to the theory of evolution. On a form of spurious correlation which may arise when indices are used in the measurement of organs. Proceedings of the Royal Society of London, v. 60, p. 489-502.
Egozcue, J.J., and Pawlowsky-Glahn, V. (2005) Groups of parts and their balances in compositional data analysis. Mathematical Geology, v. 37, p. 795-828.
Egozcue, J.J., and Pawlowsky-Glahn, V. (2006) Simplicial geometry for compositional data. in Buccianti, A., Mateu-Figueras, G., and Pawlowsky-Glahn, V., editors, Compositional Data Analysis in the Geosciences: From Theory to Practice, Geological Society of London, Special Publications 264, p. 145-159.
Pawlowsky-Glahn, V., Egozcue, J.J., and Tolosana-Delgado, R. (2015) Modeling and Analysis of Compositional Data. John Wiley & Sons, New York. 272 pp.
van den Boogaart, K.G., and Tolosana-Delgado, R. (2013) Analyzing Compositional Data with R. Springer-Verlag, Berlin. 258 pp.
von Eynatten, H., Pawlowsky-Glahn, V., and Egozcue, J.J. (2002) Understanding perturbation on the simplex: a simple method to better visualise and interpret compositional data in ternary diagrams. Mathematical Geology, v. 34, p. 249-257.

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