The United States Securities and Exchange Commission (“SEC”) adopted amendments to the definitions of both accredited investor under Securities Act of 1933 (“Securities Act”) Regulation D Rule 501 and qualified institutional buyer (“QIB”) under Securities Act Rule 144A.
Under the new accredited investor definition, the following parties would now be considered accredited investors: (1) designated
The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) conducted a series of examinations into private fund advisers. See the SEC risk alert here. To say the least, OCIE was not pleased with the results, indicating a significant percentage of these advisers had compliance issues. In particular, OCIE found problems with: (1) conflicts of
The United States Department of Labor (“DOL”) has had a very active summer regulating the securities industry. Yes, you heard it right, the DOL has made certain pronouncements that have considerable effect on the securities industry.
Initially, the DOL allowed 401(k) plans to invest in private equity funds so long as they are managed by
Join our colleagues, Jon Heyl and Alex Kerzhner, in what is sure to be an important review of the challenges facing the PE/HF industry during the pandemic. The webinar will take place on Thursday, June 4, 2020 at 2 p.m. (EDT)/ 11 a.m. (PDT).
Please register (or click) at this site: https://foxrothschild2.webex.com/mw3300/mywebex/default.do?nomenu=true&siteurl=foxrothschild2&service=6&rnd=0.520498216233004&main_url=https%3A%2F%2Ffoxrothschild2.webex.com%2Fec3300%2Feventcenter%2Fevent%2FeventAction.do%3FtheAction%3Ddetail%26%26%26EMK%3D4832534b00000004a042107c2af537d531b2ac872f843c41108c4da97db0231303c011bd8277765f%26siteurl%3Dfoxrothschild2%26confViewID%3D161131266161257810%26encryptTicket%3DSDJTSwAAAASqE0ZuyzNd7jcvQfkqx3mqfGmPjA6SK9Z5v54tVs7LwQ2%26
In 2 separate actions, the SEC came down very hard on private equity/hedge funds regarding both disclosure and operational issues. See https://www.sec.gov/enforce/ia-5478-s; and https://www.sec.gov/enforce/ia-5485-s.
In the first action, a firm settled for $1 million because it allegedly mischaracterized its prior investments in its marketing materials. This purported misrepresentation led to an over-statement of the fund’s
The SEC recently brought and settled an action against a former wannabe fund manager, who lied to prospective investors that he already had raised millions of dollars in the fund from other (fictitious) investors. The fund manager was barred from the securities industry for 10 years. See https://www.sec.gov/litigation/litreleases/2020/lr24783.htm.
The SEC also claimed that the fund
The SEC’s Division of Investment Management issued updated guidance regarding the definition of “knowledgeable employees” under Rule 3c-5 of the Investment Company Act of 1940. See Managed Funds Ass’n, SEC No-Action Letter, avail. 2/6/14, https://www.managedfunds.org/wp-content/uploads/2014/02/Staff-Response-to-MFA-3c-5-Letter-Final-Outgoing-2-6-14-no-sigs.pdf
The SEC staff explained that “private funds” include private equity funds, hedge funds, and other pooled investment vehicles, excluded from
The SEC’s Division of Investment Management said it will not object if an investment adviser pays a cash fee for the solicitation of advisory clients, although a federal district court injunctive order precluded it. RBS Sec. Inc., SEC No-Action Letter, avail. 11/26/13, http://www.sec.gov/divisions/investment/noaction/2013/rbssecurities-11252013-section 206.htm.
In granting relief, the staff noted especially that the firm
The SEC’s push to conduct narrowly focused examinations of newly registered investment advisers is ahead of schedule and providing it with insights about compliance weaknesses, hedge fund advisers, and private equity companies.
To date, the SEC has completed 210 presence exams while 42 are currently open. Exam teams are focused on compliance associated with marketing
The SEC has launched an investment adviser examination initiative to review those who have never been examined including advisers domiciled outside the United States.
If an adviser has been registered for more than three years and never been the subject of an SEC exam or is domiciled outside the U.S., an exam probably will take