In July 2023, Delaware amended its code to allow certain secured creditors under mortgages or pledges of assets to rely on a Board of Directors decision if the value is less than or equal to the total amount secured. The failure to satisfy this provision would not result in invalidation if the transferee provided value… Read more »
Posts Categorized: Funds – U.S.
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 »
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 »