2015 SEC Enforcement Round Up

Fees and Expenses SEC Charges Santa Barbara-Based Hedge Fund Firm, Executives and Auditor for Improper Expense Allocations Alpha Titans LLC, a Santa Barbara, CA based hedge fund misallocated assets from two affiliated private funds to pay for firm expenses. The SEC investigation found that the firm’s principal, Timothy McCormack, and general counsel, Kelly Kaeser, used […]

SEC Investigations Target Private Equity Fees and Disclosures

The Securities and Exchange Commission (“SEC”) has prioritized investigating private equity firms this year, particularly, their fee structures. This increase in enforcement highlights the SEC’s concern for transparency in fee disclosures (see our previous article on private equity fees) made to investors; a concern that was articulated by Andrew Bowden in his “Spreading Sunshine in […]

SEC Provides Clarity on Venture Capital Exemption

Recently, the Securities and Exchange Commission (“SEC”) issued a no-action letter in response to a request for clarification of the Venture Capital Exemption (“Exemption”) to Section 203 of the Investment Advisers Act of 1940. Section 203 specifically addresses the registration of investment advisers and any applicable exemptions firms may rely on. Under the Exemption, any […]

Cybersecurity Policies: What Are Regulators Looking For From Your Firm?

With increasing regulatory pressure to implement comprehensive cybersecurity policies, now is a good time to make sure your firm is prepared. The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (“OCIE”), the National Futures Association (“NFA”) and the Commodity Futures Trading Commission are all releasing proposed rules, guidance and/or examination priorities focused on […]

The New AML Rules: Implications for Private Fund Managers

On August 25, 2015, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Treasury Department, issued aproposed rule requiring all financial institutions, including registered investment advisers, to implement and monitor anti-money laundering (“AML”) programs. Other types of financial institutions, such as banks and broker-dealers, have long been required to meet AML requirements. This […]

Compliance FAQ: Investment Adviser Registration

Q: What kinds of adviser registration are there? A: Most states and the U.S. Securities Exchange Commission(“SEC”) register investment advisers.   For the SEC, registrants must select a basis for registration on Form ADV. If it does not meet any of those criteria, then it will normally register with a state. Though not technically a registration, […]

Is the SEC’s 180 Day Examination and Enforcement Limit More Guideline than Rule?

The Securities and Exchange Commission’s (“SEC”) compliance examination and enforcement investigation can be an excruciating experience for firms. Prior to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), examination and enforcement investigations could often go on for over a year. SEC enforcement investigations are private and often have two steps: a) […]

Priority Topics for Annual Employee Training

Complexities in regulation and firm policies and procedures, including the constantly changing nature of each, are just some of the reasons periodic employee training is beneficial to any firm. See our tips for conducting employee training. Firms should consider, among other things, the following key topics for their next employee training: Personal Trading. Educating employees […]

Standards for Insider Trading Liability Remain Unclear

The Federal courts are grappling with the impact of the Second Circuit’s Newman decision (see our analysis). The Newman decision, though complex in reasoning, boils down to a simple fact: the tippee (Newman) was so far removed from the tipper of the inside information that it was difficult, and the government failed, to prove that […]

Hot Topics to Cover in Your Next Mock Exam

Recent examinations by the Securities and Exchange Commission (“SEC”) focused on a number of initiatives including presence exams, newly-registered advisers and firms that had been registered for a number of years but never examined. With these initiatives completed or coming to an end, exams on key topics such asprivate equity, valuations, conflict of interest disclosures […]