Posts Categorized: Investment Advisers

SEC Exam Priorities – 2023/24

On October 16, 2023, the Division of Examinations (the “Division”) of the Securities and Exchange Commission (the “SEC”) released its 2023/24 exam priorities, moving the annual notice up a few months to coincide better with the SEC fiscal year. Among other things, the notice confirmed that one of the priorities again will be to examine… Read more »

SEC Proposes New Private Fund Rules

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 »

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 »

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 »

European Union’s AIFMD Amended with New Rules on “Pre-Marketing” and “Reverse Solicitation”

On April 6, 2019, the European Parliament approved a new Directive and a new Regulation, each on Cross-Border Distribution of Collective Investment Undertakings (respectively, the “CBDF Directive” and the “CBDF Regulation”; together, the “CBDF Legislation”).  Among other things, the CBDF Legislation amends the Alternative Investment Funds Directive (the “AIFMD”) to make clear that to be… 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 »

SEC Reinforces Ban on Testimonial Marketing for Investment Advisers

In March 2014 the Securities and Exchange Commission (the “SEC”) issued guidance on the use by investment advisers and investment advisory representatives (together, “IAs”) in their marketing of testimonials (but not objective third-party articles) posted on social media.  Under Section 206(4) of the Investment Advisers Act (prohibiting fraudulent, deceptive or manipulative acts) and Rule 206(4)-1(a)(1) (finding testimonials… Read more »