On February 9, 2022, the Securities and Exchange Commission (the “SEC”) proposed new rules (see also fact sheet) for private fund managers, i.e., advisers to funds that are “private funds” under the Investment Company Act of 1940. Among other things, the proposals would: With respect to advisers to private funds required to be registered with… Read more »
Posts Categorized: Funds – U.S.
Tests for Qualified Clients of RIAs Raised
Under the Investment Advisers Act of 1940, registered investment advisers (“RIAs”) are prohibited from charging advisory clients performance fees based on a percentage of gains of the funds of a client unless all such advisory clients have, as set forth in Rule 205-3, either assets under management with the RIA of at least $1 million… Read more »
SEC Approves Update of “Accredited Investor” and “Qualified Institutional Buyer” Definitions
On August 26, 2020, the Securities and Exchange Commission (the “SEC”) voted 3-2 to adopt its proposed revisions to expand the definition of “accredited investor” (“AI”) and “qualified institutional buyer” (“QIB”), which marked the first major revision since 1982. The revisions included: (i) the new definition of AI allows an individual who holds certain professional… Read more »
CFTC, FinCen and SEC Joint “Reminder” to Cryptocurrency World of AML Requirements
On October 11, 2019, the Commodity Futures Trading Commission (the “CFTC”), the Financial Crimes Enforcement Network (“FinCen”) of the U.S. Treasury and the Securities and Exchange Commission (the “SEC”) issued a joint statement reminding “persons engaged in activities involving digital assets of their anti-money laundering and countering of financing of terrorism (“AML/CFT”) obligations under the… Read more »
Second Circuit Find Private Right of Action to Rescind Contracts Under Investment Company Act
The Second Circuit has created a split with the Third and Ninth Circuits by finding that Section 47(b) of the Investment Company Act provides plaintiffs an implied private right of action with regard to contracts, and the plaintiffs in that case could therefore seek rescission of the contracts in the form of junior notes. This… Read more »
SEC Office of Compliance Inspections and Examinations (“OCIE”) Issues Alert on Cross-Trades Under Investment Advisers Act
On September 4, 2019, the OCIE issued a Risk Alert on issues identified by the staff during audits of firms of cross-trades that violate the applicable rules. Section 206(3) of the Investment Advisers Act effectively prohibits an adviser, acting as a principal or agent, from carrying out certain cross trades that would be the result… Read more »
SEC Acts Against Private Fund Asset Transfers
On March 15, 2019, the Securities and Exchange Commission (the “SEC”) took cease and desist action against Talimco, LLC (“Talimco”), a private fund manager, and Grant Rogers, its Chief Operating Officer (“Rogers”), finding that Talimco had sold mortgage participations owned by collateralized debt obligations (“CDOs”) that it managed to a fund (the “Fund”) also managed… Read more »
OCIE Issues Risk Alert on Cash Solicitation Rule
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (the “OCIE”) has issued, on October 31, 2018, a Risk Alert concerning compliance with the so-called Cash Solicitation Rule (Rule 206(4)-3 under the Investment Advisers Act of 1940 (the “Advisers Act”)). The rule requires investment advisers required to be registered under the Advisers Act… Read more »
Fifth Circuit Vacates DOL Fiduciary Rule
On June 21, 2018, the U.S. Fifth Circuit Court of Appeals vacated the U.S. Department of Labor’s (the “DOL”) fiduciary rule. The rule would have made an advisor to an employee benefit plan or IRA an ERISA fiduciary if it renders most “investment advice” for compensation. That brings at least for now an end to… Read more »
FINRA Issues Letter Guidance On Use of Performance Information with Institutional Investors
On June 9, 2017, the Financial Industry Regulatory Authority (“FINRA”) issued a letter (the “Letter”) giving guidance in response to a request by an open-ended fund to allow it to provide “Related Performance Information” in marketing material used with institutional investors. “Related Performance Information” is defined as the actual performance of separate or private accounts or funds… Read more »