Investment Fund Law Blog

InvestmentFundLawBlog

Updates and Insights on Legal Issues Facing Fund Managers and Investors

Category Archives: Private Equity

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FinCEN Proposes to Regulate Investment Advisers under the Bank Secrecy Act

Posted in Advisory, Client Alert, Hedge Funds, Investment Advisers, Private Equity, Private Funds
The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking on August 25, 2015 which, among other things, would add SEC-registered investment advisers to the “financial institutions” regulated under the Bank Secrecy Act (BSA). This represents another step by the U.S. government to expand the professions and industries deemed anti-money… Continue Reading

FinCEN Proposes New AML Regulations for Investment Advisers

Posted in Advisory, Hedge Funds, Investment Advisers, Private Equity, Private Funds
In a release issued today, the Financial Crimes Enforcement Network (FinCEN) has proposed anti-money laundering (AML) regulations for investment advisers. The proposed rule requires investment advisers registered or required to be registered with the Securities and Exchange Commission (SEC) to establish AML programs and report suspicious activity to FinCEN pursuant to the Bank Secrecy Act… Continue Reading

PILLSBURY PARTNER QUOTED IN FUNDFIRE

Posted in Hedge Funds, Investment Advisers, Private Equity, Private Funds
Kimberly Mann, co-head of Pillsbury’s Investment Funds and Investment Management Group, was interviewed and quoted at length in an article published in FundFire this week. The article explored whether regulators should permit asset managers to settle cases without admitting culpability. In response to that question, Ms. Mann, who has expertise in investment advisor regulatory and… Continue Reading

Advisers Get Ready – New AML Requirements May Be on the Way

Posted in Advisory, Hedge Funds, Investment Advisers, Private Equity, Private Funds
The U.S. Treasury Department’s Financial Crimes Enforcement Network will soon propose new rules that may require investment advisers to establish and implement written anti-money laundering programs designed to prevent advisory clients from using advisers to launder funds or perpetrate other criminal activities. The rules also may require advisers to report suspicious client activity. The new… Continue Reading

Treasury Imposes Toll Charge on Some Transfers of Assets by U.S. Taxpayers to Partnerships with Their Foreign Affiliates

Posted in Advisory, Client Alert, Hedge Funds, Private Equity, Private Funds
On August 6, 2015, the Treasury and the IRS issued Notice 2015-54, which implements a Clinton-era tax provision intended to prevent U.S. taxpayers from using the partnership provisions of the Code to shift built-in gain on property contributed to a partnership to non-U.S. affiliates of the transferor that are partners in the transferee partnership. These… Continue Reading

Proposed Regulations Target Management Fee Waivers

Posted in Client Alert, Investment Advisers, Private Equity, Private Funds
In the Federal Register for July 23, 2015, the Treasury Department published proposed regulations regarding the circumstances under which partnership allocations and distributions will be treated as disguised payments for services. These proposed regulations are aimed at attempts by investment fund managers to convert ordinary, management fee income into tax-favored long-term capital gains through the… Continue Reading

Proposed Treasury Regulations May End Private Equity Management Fee Waivers

Posted in Investment Advisers, Private Equity, Private Funds
It has been a common practice of private equity firms to convert their right to receive management fees from the funds they manage into the right to receive profits and distributions from the funds through management fee waiver arrangements.  As a result of these arrangements, the firms achieve a lower tax rate because the profits… Continue Reading

Consultant or Employee? Fund Managers Should Re-Examine the Status of their Consultants in Light of the DOL’s New Interpretation

Posted in Client Alert, Investment Advisers, Private Equity, Private Funds
On July 15, 2015, the Wage and Hour Division of the U.S. Department of Labor (DOL) issued Administrator’s Interpretation No. 2015-1, adopting a very expansive interpretation of the definition of employees under the Fair Labor Standards Act (FLSA) under which many workers currently treated as independent contractors will need to be reclassified as employees. The… Continue Reading

BE-10 Deadline Extended

Posted in Investment Advisers, Private Equity, Private Funds
The Bureau of Economic Analysis (BEA) has extended the deadline to file Form BE-10, Benchmark Survey of U.S. Direct Investment Abroad, to June 30, 2015, for all new filers. For information on Form BE-10 filing, please read our recent article HERE. Further information on BE-10 is available at the BEA website.  … Continue Reading

Have you filed your BE-10? Deadline is approaching

Posted in Client Alert, Investment Advisers, Private Equity, Private Funds
Mandatory reporting required by the Bureau of Economic Analysis on Form BE-10 – 2014 Benchmark Survey of U.S. Direct Investment Abroad Investment managers, general partners, hedge funds and private equity funds are among those that may have to file What is BE-10? BE-10 is a benchmark survey of U.S. direct investment abroad, conducted once every… Continue Reading

2015 SEC Examination Priorities

Posted in Broker-Dealers, Investment Advisers, Private Equity, Private Funds
The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) recently released its Examination Priorities for 2015.  The priorities represent certain practices and products that OCIE believes present a potentially higher risk to investors and/or the integrity of the US capital markets.  In 2015, OCIE’s priorities focus on issues involving investment advisers, broker-dealers and transfer agents… Continue Reading

2015 Annual Compliance Obligations for Registered Firms – What You Need to Know

Posted in Advisory, Client Alert, Investment Advisers, Private Equity, Private Funds
Annual Compliance Obligations—What You Need To Know As the new year is upon us, there are some important annual compliance obligations Investment Advisers either registered with the Securities and Exchange Commission (the “SEC”) or with a particular state (“Investment Adviser”) and Commodity Pool Operators (“CPOs”) or Commodity Trading Advisors (“CTAs”) registered with the Commodity Futures… Continue Reading

Client Alert: The Second Circuit Raises the Bar for Insider Trading Convictions

Posted in Advisory, Broker-Dealers, Investment Advisers, Private Equity, Private Funds, Registered Investment Companies, Uncategorized
By William M. Sullivan, Jr. and Jay B. Gould Under the Second Circuit’s new ruling, prosecutors have two large hurdles they must clear to convict under securities laws. First, they must prove that a defendant knew that the source of inside information disclosed tips in exchange for a personal benefit. Second, the definition of “personal… Continue Reading

When Sharing Isn’t Caring – SEC Charges Private Equity Fund Adviser for Sharing Expenses Between Two Portfolio Companies

Posted in Investment Advisers, Private Equity
On September 22, 2014, the Securities and Exchange Commission (the “SEC”) charged private equity fund adviser, Lincolnshire Management, Inc. (“Lincolnshire”), with misallocating expenses shared between two portfolio companies. Lincolnshire integrated two portfolio companies that were each owned by a different Lincolnshire private equity fund. Lincolnshire owed a fiduciary duty to each fund and such fiduciary… Continue Reading

SEC Enforcement Against Short Sellers Continues

Posted in Investment Advisers, Private Equity
On September 16, 2014, the Securities and Exchange Commission (“SEC”) announced the latest sanctions in a continuing enforcement initiative against certain hedge fund advisers and private equity firms that have participated in an offering of a stock after short selling it during a restricted period in contravention of SEC rules. The SEC last year announced… Continue Reading

2014 Examination Priorities Published by the SEC

Posted in Broker-Dealers, Investment Advisers, Private Equity, Private Funds
Today, the Securities and Exchange Commission published its 2014 priorities for its National Examination Program (“NEP”).  These priorities cover a wide range of issues at financial institutions, including investment advisers and investment companies, broker-dealers, clearing agencies, exchanges and other self-regulatory organizations, hedge funds, private equity funds, and transfer agents.  Similar to the 2013 priorities, the… Continue Reading

The Securities and Exchange Commission Opens the Door for Hedge Fund Advertising

Posted in Advisory, Investment Advisers, Private Equity, Private Funds
Written by:  Jay B. Gould and Jessica Brown On July 10, 2013, the Securities and Exchange Commission (“SEC”) voted to lift the ban on general solicitation and advertising by private funds (and other private company issuers) as mandated by Congress in the Jumpstart Our Business Startups Act (“JOBS Act”). In addition to lifting the ban on… Continue Reading

SEC Hammers Private Equity Fund Manager

Posted in Advisory, Investment Advisers, Private Equity, Private Funds
Last month, the Securities and Exchange Commission (the “SEC”), published its examination priorities for 2013.  As we suggested in our Blog posting at that time, the SEC is fixated on examining and bringing enforcement against its newest class of investment adviser – managers of private equity funds.  Fast forward four weeks, and we should not… Continue Reading

SEC Issues Additional Guidance Regarding the Custody Rule After Finding Wide Spread and Varied Non-Compliance By Investment Advisers

Posted in Advisory, Investment Advisers, Private Equity, Private Funds
Last week the SEC issued a Risk Alert and an Investor Bulletin on the Custody Rule after its National Examination Program (“NEP”) observed significant deficiencies in recent examinations involving custody and safety of client assets by registered investment advisers.  The stated purpose of the Risk Alert was to assist advisers with complying with the custody… Continue Reading

Private Equity: Blindsided by the FCPA– Hedging Against Anti-Corruption Deal Risk

Posted in Guest Post, Private Equity
Written by:  G. Derek Andreson, James L. Kelly, Christopher M. Zochowski, Marc H. Axelbaum and Ryan R. Sparacino This article was also published in Law360. Until a few years ago, private equity firms enjoyed relative insulation from regulatory scrutiny of overseas acquisitions and the operations of multi-national portfolio companies. No longer is that the case.… Continue Reading

SEC Examinations Target Private Equity and Hedge Fund Managers for 2013

Posted in Broker-Dealers, Investment Advisers, Private Equity, Private Funds, Registered Investment Companies
On February 21, 2013, the Staff of the Securities and Exchange Commission (the “Staff” and the “SEC,” respectively) published its 2013 priorities for the National Examination Program (“NEP”) in order to provide registrants with the opportunity to bring their organizations into compliance with the areas that are perceived by the Staff to have heightened risk. … Continue Reading

Limiting Private Equity Fund Exposure to the ERISA Obligations of Portfolio Companies

Posted in Advisory, Private Equity
By Peter J. Hunt, Susan P. Serota, Matthew C. Ryan1 In welcome news for private equity (“PE”) funds, a recent district court opinion determined that two PE funds and their bankrupt portfolio company were not a “controlled group” and thus the PE funds were not responsible for pension liabilities at the portfolio company. The decision, Sun… Continue Reading