Investment Fund Law Blog

InvestmentFundLawBlog

Updates and Insights on Legal Issues Facing Fund Managers and Investors

Category Archives: Private Funds

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Size Doesn’t Matter: Insider Trading Charges for $11k Profit

Posted in Investment Advisers, Private Funds
The Securities and Exchange Commission (the “SEC”) charged Kevin McGrath, a partner at a New York investor relations firm with insider trading.  According to the SEC complaint, McGrath allegedly received confidential information from clients in order to prepare press releases.  The SEC discovered McGrath used non-public information from two different clients to buy or sell … Continue Reading

Private Fund Managers as Broker-Dealers and How to Avoid It

Posted in Broker-Dealers, Investment Advisers, Private Funds
Private equity firms were put on notice last year that they may be subject to registration as broker dealers when David Blass, head of the Division of Markets and Trading at the Securities and Exchange Commission (“SEC”), provided his insights at an industry conference.  Since that time, the SEC has published their examination priorities list, … Continue Reading

New Custody Compliance Tasks for California Registered Advisers Effective April 1

Posted in Advisory, Investment Advisers, Private Funds
Written by: Ildiko Duckor The California Commissioner of Business Oversight (“Commissioner”) recently amended California’s custody rule 10 C.C.R. Section 260.237 (the “New Custody Rule”).  The New Custody Rule will be effective on April 1, 2014. All investment advisers licensed or required to be licensed in California must comply with the New Custody Rule.  California Exempt … Continue Reading

The CFTC and Japan’s FSA Sign Cross-Border Agreement

Posted in Investment Advisers, Private Funds
On March 10, 2014, the U.S. Commodity Futures Trading Commission and the Financial Services Agency of Japan signed a Memorandum of Cooperation which expresses the agencies’ intent to work together to supervise and oversee regulated entities that operate on a cross-border basis in Japan and the United States.  The agencies intend to cooperate in the … Continue Reading

The CFTC and Japan’s FSA Sign Cross-Border Agreement

Posted in Investment Advisers, Private Funds
Written by:  Jessica M. Brown and Michael G. Wu On March 10, 2014, the U.S. Commodity Futures Trading Commission and the Financial Services Agency of Japan signed a Memorandum of Cooperation which expresses the agencies’ intent to work together to supervise and oversee regulated entities that operate on a cross-border basis in Japan and the … Continue Reading

SEC Risk Alert: Selecting Alternative Investments and Their Managers

Posted in Investment Advisers, Private Funds
Written by:  Jay B. Gould and Jessica M. Brown The Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations released a “Risk Alert” on January 28, 2014, which focuses on the due diligence investment advisers perform in alternative investments[1] and managers for their clients. After observing an increasing trend in advisers recommending alternative investments … Continue Reading

Reminder- March 3rd Deadline for Annual CFTC Exemption Affirmation

Posted in Investment Advisers, Private Funds
The annual affirmation process started on December 3, 2013. Advisers who relied on an exemption or exclusion from CPO registration under CFTC Regulation 4.5, 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5) or an exemption from CTA registration under 4.14(a)(8) and filed a notice with the NFA must affirm the exemption or exclusion annually within 60 days after the … Continue Reading

California’s New LLC Law: Next Steps for California LLCs

Posted in Advisory, Investment Advisers, Private Funds
If your management company or fund was formed as a California limited liability company, you need to review your Operating Agreement to determine whether amendments need to be made. On January 1, 2014, California’s Beverly-Killea Limited Liability Company Act (Old Act) was superseded by the California Revised Uniform Limited Liability Company Act (New Act). The … Continue Reading

The Volcker Rule–A Suggested Approach for Banking Entities When Analyzing its Impact on Business Models, Activities and Transactions

Posted in Advisory, Private Funds
Written by:  Joseph T. Lynyak, III and Anthony H. Schouten More than three years following the passage of the Dodd-Frank Act, and intense inter-agency negotiations, the federal financial regulatory agencies collectively adopted the final version of the “Volcker Rule,” or “Rule”—which imposes new and potentially severe limitations on domestic and foreign banking entities’ activities in … Continue Reading

Amended TIC Form B – Information for U.S. Investment Advisers

Posted in Investment Advisers, Private Funds
Written by: Jessica M. Brown As a result of recent amendments made by the U.S. Department of Treasury to the Treasury International Capital Form B (“Form B”), private funds and investment advisers may be required to file Form B.  Form B requires a fund manager or investment adviser to report certain information concerning “claims” and … 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

ANNUAL COMPLIANCE OBLIGATIONS–WHAT YOU NEED TO KNOW

Posted in Advisory, Investment Advisers, Private Funds
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 Trading Commission (the “CFTC”) should be aware … Continue Reading

SEC Charges London-based Hedge Fund Adviser with Valuation Failures

Posted in Investment Advisers, Private Funds
Written by: Jay B. Gould On December 12, 2013, the Securities and Exchange Commission (SEC) charged a London-based hedge fund adviser and its former U.S.-based holding company with internal controls failures that led to the overvaluation of a fund’s assets and inflated fee revenue for the firms.  The investigation came out of the SEC’s Aberrational … Continue Reading

Prosecution Deferred May Still Be Prosecution

Posted in Investment Advisers, Private Funds
Written by: Jay B. Gould, Michael G. Wu and Jessica M. Brown In January, 2010, the Securities and Exchange Commission (“SEC”) announced its Enforcement Cooperation Initiative (“Initiative”), which provided the SEC with the ability to offer certain individuals or entities immunity or other preferential treatment in exchange for information about illegal activities and/or cooperation with … Continue Reading

SEC Sanctions Three Advisers for Custody Rule Violations

Posted in Investment Advisers, Private Funds
Written by:  Jay B. Gould and Jessica M. Brown On October 28, 2013, the Securities and Exchange Commission (“SEC”)  brought enforcement actions and imposed sanctions on three different registered advisers and their principals for violations of Rule 206(4)-2 under the Investment Advisers Act of 1940 (the “Custody Rule”).  The circumstances that gave rise to each … Continue Reading

Pillsbury Honored For Hedge Fund Work

Posted in Awards and Recognitions, Private Funds
Pillsbury was recently recognized for the second time as the “Best Onshore Law Firm – Hedge Fund Start-Ups” at the 2013 HFMWeek U.S. Hedge Fund Service Awards in New York City. This marks the fifth consecutive year Pillsbury has been honored by HFMWeek for its service to the hedge fund community. Pillsbury also won the … Continue Reading

SEC Issues Proposal on Crowdfunding

Posted in Investment Advisers, Private Funds
Written by: Jay B. Gould On October 23, 2013, the Securities and Exchange Commission (“SEC”) voted unanimously to propose rules under the JOBS Act to permit companies to offer and sell securities through crowdfunding. Crowdfunding describes an evolving method of raising capital that has been used outside of the securities arena to raise funds through … Continue Reading

Here’s Why The Canadian Hedge Fund Industry Is So Small

Posted in Guest Post, Private Funds
This article was published by Business in Canada and is reprinted here with permission. Business in Canada recently had the opportunity to interview Richard Taglianetti, a giant in the hedge fund universe who has raised millions of dollars for start-up managers over the course of his career. At present, Richard serves as the senior managing director of hedge … Continue Reading

23 Firms Caught in SEC Short Selling Enforcement Snare

Posted in Investment Advisers, Private Funds
Written by:  Jay B. Gould On September 17, 2013, the Securities and Exchange Commission (“SEC”) announced enforcement actions against 23 firms for short selling violations as the agency increases its focus on preventing firms from improperly participating in public stock offerings after selling short those same stocks.  The enforcement actions are being settled by 22 … Continue Reading

Minimizing Anti-Corruption Deal Risk While Maximizing Returns on Venture Capital Investments

Posted in Advisory, Guest Post, Private Funds
This article was published by The FCPA Report and is reprinted here with permission. More and more, venture capital firms are investing in start-ups seeking to expand internationally or with nascent cross-border operations in place.  Such investments offer opportunities for lucrative returns but also carry significant anti-corruption risk that VC firms are often ill-equipped to manage.  For … Continue Reading

Recent Regulation FD Enforcement Action Provides Lessons for Closed-End Funds

Posted in Investment Advisers, Private Funds
Written by:  Kimberly V. Mann The Security and Exchange Commission’s recent enforcement action against Lawrence D. Polizzotto serves as a reminder to all issuers that Regulation FD enforcement is alive and well. The Polizzotto Case Polizzotto, the former vice president of investor relations at First Solar, Inc. (and, ironically, a member of the company’s Disclosure … Continue Reading

SEC Submits First Annual Report to Congress Relating to the Use of Data Collected on Form PF

Posted in Investment Advisers, Private Funds
Written by:  Jessica Brown On July 25, 2013, the Securities and Exchange Commission’s (“SEC”) Division of Investment Management released its first annual report to Congress, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), regarding how it used private fund data collected from investment advisers on Form PF. Dodd-Frank gave the … Continue Reading