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We are pleased to announce that Pillsbury has been shortlisted in the category of “Best Onshore Law Firm – Client Service” by HFM Week’s US Hedge Fund Performance Awards 2017. In 2016, we were awarded “Best Onshore Law Firm for Hedge Fund Startups”.

The US Hedge Fund Performance Awards was established to recognize providers of services to the hedge fund sector that have demonstrated exceptional innovation, customer service and performance over the last year. The awards are determined by a panel of independent industry experts who consider a combination of quantitative and qualitative measures.

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The Office of Compliance Inspections and Examinations (OCIE) of the SEC issued a Risk Alert yesterday providing a list of the most frequently identified compliance issues relating to the Advertising Rule (Rule 206(4)-1) under the Investment Advisers Act of 1940.  These compliance issues were identified as part of the OCIE examination of investment advisers:  misleading performance results, misleading one-on-one presentations, misleading claim of compliance with voluntary performance standards, “cherry-picked” profitable stock selections, misleading selection of recommendations and insufficient/inaccurate compliance policies and procedures.

Compliance with the Advertising Rule has long been, and remains, a favorite focus of the SEC.  In an age of fundraising challenges, investment advisers must balance the pressing need of appealing to prospective clients with adherence to precise regulatory standards.  Each marketing piece should go through rigorous internal review and sign-off procedures and, as necessary, outside counsel evaluation.  Investment advisers are urged to pay special attention to any form of performance or track record marketing.

Click here for the full Risk Alert. Contact your Pillsbury attorney for additional assistance.

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T+2 Settlement becomes mandatory for most broker-dealer transactions on September 5.   While Rule 15c6-1(d) allows, in connection with firm commitment underwritings, the issuer and underwriters to agree to different settlement cycles, as noted in the SIFMA guidance, SIFMA expects equity offerings, including IPOs, to transition to T+2 settlement cycles.   SIFMA expects debt offerings to continue with current market practice (i.e., either conform to T+2 or to continue with extended settlement cycles as with many high yield issuances).  It may well be that offerings of convertible debt and other equity-linked securities retain, at least in the near term, adherence to the current T+3/T+4 cycle given the documentation process involved with shorter settlement cycles (i.e., typically, drafting of indentures does not start until the deal is launched or priced).

It is recommended that, at the beginning of any underwritten offering process, the parties should agree upon the settlement cycle to be used as that will, of course, affect documentation and process timing.  SIFMA provides some guidance in that regard.

For general T+2 questions, the securities industry has set up a T+2 implementation website.

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Pillsbury is hosting an event with the Association of Women in Alternative Investing (AWAI) on Wednesday, August 9, 2017.  Kathleen Dunlap, CEO of Girls Who Invest (www.girlswhoinvest.org) will be speaking about the GWI program and how it inspires and supports young women become tomorrow’s investment leaders. The program will also include some of the young women who are interning in San Francisco after participating in GWI.  Ildiko Duckor, co-head of  Pillsbury’s investment funds practice, will moderate the program.

Introduction by: Carol Jupiter, Member of the Steering Committee of AWAI

Moderated by: Ildiko Duckor,  Partner, Pillsbury Winthrop Shaw Pittman LLP

Speaker: Kathleen Dunlap, CEO, Girls Who Invest

The event will be held at Pillsbury located in 4 Embarcadero Center, Suite 2200, San Francisco, CA 94111.

To register please click HERE.

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On June 9, 2017, the Department of Labor (DOL) regulation updating the definition of “fiduciary” for purposes of ERISA became effective, along with a series of new and updated prohibited transaction exemptions.  The DOL regulation expands the types of activities that can give rise to fiduciary status, and applies not only to plans subject to ERISA but also to self-directed IRAs.  While the DOL is still reviewing whether changes should be made to the regulation to reduce the regulatory burden, and both the DOL and Congress are considering more drastic action such as full repeal, for the time being the regulation is in effect.

A broad reading of the definition of “fiduciary” under the new rule could cause investment fund managers to become fiduciaries to ERISA and IRA investors in their funds, and to prospective investors, regardless whether a fund they manage is a “plan assets” fund.  Fund managers may need to take action now, notifying benefit plan investors, obtaining representations and/or amending subscription applications.

Private investment funds that limit ERISA plan and IRA investments to below 25% of each class of equity interests (or that qualify as a Venture Capital Operating Company (VCOC) or a Real Estate Operating Company (REOC)) are still exempt from ERISA with respect to most of their activities—their investment transactions and compensation arrangements are exempt from ERISA’s fiduciary rules and from the prohibited transaction restrictions of ERISA and the Internal Revenue Code.  However, under the new DOL regulation, certain types of marketing and outreach activities to new and current benefit plan investors could be viewed as “recommendations” to invest in (or continue investing in) a fund, and thus may become subject to the new fiduciary rules.

Not every marketing or outreach activity will give rise to fiduciary status, and an exemption is available for communications with financially sophisticated plan fiduciaries.  Please contact us to discuss how you can qualify for an exemption from fiduciary status and/or take necessary other action with respect to IRA and ERISA investors.

For more detailed information about the DOL fiduciary rule, please read our Alert.

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The new EU data protection framework, called the General Data Protection Regulation (GDPR), will take effect in May 2018. These new laws will significantly impact any companies doing business in Europe, even those without a physical EU presence (e.g. U.S. companies targeting Europe). If you have a website, use customer or staff data or engage in almost any form of marketing you will likely be caught. The new very high fine levels for breaches and the need to be able to prove compliance mean companies, regardless of size, must take steps now to prepare.

If you would like to explore whether and how this law may impact you, please contact Pillsbury Partner Rafi Azim-Khan (Data Privacy Europe) or the investment management attorney you work with.

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In a press release today, The U.S. Commodity Futures Trading Commission (the “Commission”) unanimously approved a final rule amending Regulation 1.31.

The Commission is amending the recordkeeping obligations set forth in Commission regulations along with corresponding technical changes to certain provisions regarding retention of oral communications and record retention requirements applicable to swap dealers and major swap participants, respectively. The amendments modernize and make technology neutral the form and manner in which regulatory records must be kept, as well as rationalize the rule text for ease of understanding for those persons required to keep records pursuant to the Commodity Exchange Act and regulations promulgated by the Commission thereunder. The amendments do not alter any existing requirements regarding the types of regulatory records to be inspected, produced, and maintained set forth in other Commission regulations.

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Report of Foreign Bank and Financial Accounts now due on Tax Day, with auto-extension for six months.

Takeaways

  • US. citizens and resident aliens who have an interest in, or signature authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during the year are required to file a FBAR report with the Financial Crimes Enforcement Network (FinCEN).
  • In December 2016, FinCEN announced that the deadline for filing has been changed from June 30 to April 15 to coincide with the time for filing federal income tax returns (April 18 for 2017).
  • FinCEN has now granted filers who miss the new deadline an automatic six month extension (October 16, 2017).

READ MORE. . .

Read this article and additional Pillbury publications at Pillsbury Insights.

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Sam Pearse, a corporate and securities Partner from our London office and member of Pillsbury’s Investment Funds Group, will be visiting Pillsbury’s San Francisco office on April 3 and 4.

Sam has extensive experience advising asset managers on strategies regarding fund formation and fundraising in the UK and across the EU.  In particular, he has advised many US asset managers on how to navigate the complex fundraising regime within the European Union following the implementation of the Alternative Investment Fund Managers Directive, and the related investor and regulator disclosures.  As a member of Pillsbury’s Brexit team, Sam also has a good understanding of the likely landscape for asset managers in a post-Brexit world.

Sam also advises asset managers and investment advisors on the acquisition and divestment of assets, and the exercise of rights held by shareholders in UK listed companies.

If you would like to meet or speak with Sam whilst he is in San Francisco regarding your questions or concerns regarding any of the matters described above, please contact him at samuel.pearse@pillsburylaw.com.

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Pillsbury is hosting an event with 100 Women in Finance on Wednesday, March 1, 2017. Amanda Pullinger, CEO of 100 Women in Finance, and Diane Schrader, Board Member, will discuss the vision, maturity and growth of 100 Women in Finance.

The event will be held at Pillsbury located in 4 Embarcadero Center, Suite 2200, San Francisco, CA 94111.

To register for the event, please visit the 100 Women in Finance events page.