Funds & Investment Management Law Blog

News & Views on Legal Issues Facing Fund Managers and Investment Management Professionals

There’s clearly no summer lull at the SEC Division of Enforcement’s Asset Management Unit—over the past two weeks, we’ve seen a deluge of more cases impacting investment advisers than we’ve seen afternoon thunderstorms (and here in DC, that’s saying something).  In this post I’m going to briefly summarize some of the take-aways for these cases impacting the pay-to-play rule, the “testimonial rule,” and the custody rule.…
Fund managers that are affiliated with U.S. banks, or that have historically courted U.S. banks  (or their affiliates) as investors in their funds, are by now very familiar with the restrictions imposed by the “Volcker Rule” since its adoption in December 2013.  A massive regulatory undertaking, the rule was adopted by five of the U.S. financial regulators (namely, the Federal Reserve, the FDIC, the Office of the Comptroller of the Currency, the SEC, and the CFTC)…
In April 2018, the SEC proposed an Interpretation Regarding Standard of Conduct for Investment Advisers.  In that proposal, the SEC has proposed to interpret the duty of loyalty (which, combined with the duty of care, constitutes fiduciary duty) as requiring advisers to put client interests ahead of their own and make full and fair disclosure of all material facts of the relationship.  More particularly, the SEC stated that advisers must seek to avoid conflicts…
As most of you have heard, on March 15, 2018, the U.S. Court of Appeals for the Fifth Circuit issued an opinion vacating, in its entirety, the Department of Labor’s amendment to regulations defining “investment advice” for the purpose of determining who is a fiduciary (the “DOL Fiduciary Rule”) on the basis that the Department violated the Administrative Procedures Act and exceeded its regulatory authority.  The Department had the right to request an en banc review…
What is the GDPR? Even if an investment adviser or its private funds have no presence in the European Union (EU), it may still need to be concerned about EU data protection laws, in particular the new European General Data Protection Regulation (EU) 2016/679 (the “GDPR”).  The GDPR came into force on May 25, 2018, and replaced the prior data protection law, the EU Directive 95/46/EC.  The GDPR introduces significant changes from the prior EU…
The Omnibus Act signed in March by President Trump made many changes and technical corrections to existing tax laws, including corrections to the 2015 PATH Act that introduced the new concept of qualified foreign pension funds (QFPFs). QFPF status is beneficial in that it entitles a foreign pension to a complete exemption from the so-called FIRPTA rules, including withholding taxes that generally apply to REIT capital gain dividends attributable to sales of U.S. real estate. …
In the past 2 years, we have seen a clear uptick in desk exams by the SEC’s investment adviser examination staff. These “desk” exams consist of the staff sending a preliminary document request (the same as they would if they intended to arrive in person), reviewing the materials presented, and then typically sending additional requests. Sometimes requests from the staff can reach double digits depending upon what information is previously submitted. Following that production, and…
The California Legislature is considering amendments to the California Financing Law (the “CFL”), which requires most non-bank commercial lenders active in California to be licensed by the State’s Department of Business Oversight.  Senator Steve Glazer proposed new measures earlier this year that would require CFL lenders to provide standardized price disclosures to small-business borrowers (currently defined as loans of $500,000 or less).   The bill would apply to both closed-end and open-end commercial loans, as well…
Many alternative funds in recent years have included environmental, social or governance (“ESG”) considerations as part of their investment strategies. On April 23, 2018, the U.S. Department of Labor (“DOL”) issued new guidance under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) on the extent to which a plan fiduciary can consider ESG factors when making investment decisions and the use of plan assets in exercising shareholder rights.…