The Securities and Exchange Commission recently has made broker-dealer registration an area of focus for private fund managers. On March 8, 2013, the SEC filed and settled charges against a private fund manager, one of the manager’s senior executives and an external marketing consultant regarding the consultant’s failure to register as a broker-dealer. Just a few weeks later, on April 5, 2013, the Chief Counsel of the SEC’s Division of Trading and Markets spoke at an American Bar Association meeting, and posted his remarks on the SEC’s website, indicating his views with respect to broker-dealer registration concerns raised by (1) sales of interests in private funds and (2) fees related to portfolio company transactions. Managers of hedge funds and private equity funds should review and consider their marketing and business practices in light of the current SEC focus in this area.
Click here to read more on recent enforcement action and remarks by the SEC’s Chief Counsel to the Division of Trading and Markets.