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On Aug. 25, 2016, the U.S. Securities and Exchange Commission adopted a final rule that amends Form ADV — the filing that investment advisers registered with the SEC use to apply for and maintain their registration and that exempt reporting advisers utilize to claim and maintain their registration exemption. The SEC also amended its books and records rule to require more documentation with respect to performance reporting records. While these amendments will go into technical…
On Aug. 25, 2015, the Financial Crimes Enforcement Network (“FinCEN”) issued for public comment a proposed rule (the “Proposed Rule”) requiring investment advisers registered with the SEC (“RIAs”) to establish anti-money laundering (“AML”) programs and report suspicious activity to FinCEN pursuant to the Bank Secrecy Act (“BSA”). The long-anticipated Proposed Rule arrives nearly seven years after FinCEN withdrew earlier proposed AML rules, published in 2002 and 2003, directed at investment advisers, unregistered investment companies and…
On Sept. 9, 2014, the U.S. Commodity Futures Trading Commission staff granted broad relief intended to remove an obstacle to the ability of market participants, under rules previously promulgated by the U.S. Securities and Exchange Commission, to utilize general solicitation and general advertising in conducting placements of hedge fund and private equity fund interests (and other securities). This relief has certain conditions and does not represent a resolution of all of the questions and concerns…
SRZ’s video series highlighting the importance of the SEC’s annual review for fund managers features insights from regulatory & compliance partners Marc E. Elovitz and Brian T. Daly and special counsel Brad L. Caswell. The six videos cover key areas of the annual review, including the importance of timing, assessing risk areas and meeting SEC expectations, and are part of SRZ Insights, a series featuring SRZ attorneys sharing their expertise on timely topics in…
Earlier this month, the Division of Corporate Finance (“CorpFin”) of the U.S. Securities and Exchange Commission supplemented — for the second time — its Compliance and Disclosure Interpretations (“C&DIs”) to address some of the questions raised by private fund managers (and others) regarding the “bad actor” disqualification provisions of Rule 506(d). New Rule 506(d), which became effective on Sept. 23, 2013, disqualifies issuers that have committed or experienced (or who have a relationship with certain…
On Dec. 4, 2013, the Division of Corporate Finance of the U.S. Securities and Exchange Commission supplemented its Compliance and Disclosure Interpretations (“C&DIs”)[1] to address some of the questions raised by private fund managers (and others) regarding the recently promulgated “bad actor” rules contained in new Rule 506(d).[2] New Rule 506(d), which became effective on Sept. 23, 2013, disqualifies issuers that have committed or experienced (or who have a relationship with certain categories of persons…
On April 10, 2013, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission approved joint final identity theft rules, codified as Regulation S-ID (“Identity Theft Red Flags”) by the SEC and as new subpart C (“Identity Theft Red Flags”) to Part 162 by the CFTC. Managers registered with the SEC or the CFTC must make determinations of coverage (and may have to implement responsive policies) by Nov. 20, 2013. Click here to…
The U.S. Securities and Exchange Commission took three significant actions on July 10, 2013: Final Rules 1. The SEC approved final rules implementing the Congressional mandate under the Jumpstart Our Business Startups Act (the “JOBS Act”) to lift the ban on general solicitation and advertising in private securities offerings made in reliance on Rule 506 or Rule 144A of the Securities Act;[1] and 2. The SEC approved final rules disqualifying so-called “bad actors” from Regulation…
Trade errors can cause substantial harm to hedge fund managers and their investors. Such errors can, among other adverse consequences, undermine investors’ confidence in a manager’s trade execution capability, cause a manager to miss investment opportunities and divert investment and operating resources in the course of correcting errors. As such, managers, investors and regulators are theoretically aligned in their shared interest in avoiding trade errors. As a practical matter, however, there is no regulatory roadmap…
Trade errors can prove to be catastrophic for hedge fund managers, particularly where the firm fails to adopt policies, procedures and controls designed to appropriately identify, prevent, detect and handle such errors. The task of instituting robust trade error practices has been complicated by the lack of significant guidance in this area. Nonetheless, regulators and investors remain keenly focused on evaluating how hedge fund managers approach trade errors. Click here to read this article, the…