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 […]

Policy and Disclosure Considerations for Private Equity Co-Investment

In recent years the Securities and Exchange Commission (“SEC”) has focused heavily on private equity firms. Perhaps more so than for other firms, the SEC is concerned about conflicts of interest, particularly regarding external co-investment: the leveraging of a primary fund’s diligence of a portfolio company to offer a secondary investment opportunity to limited partners […]

SEC Issues Needed Guidance on Personal Securities Reporting in Discretionary Accounts

In June of this year, the Securities and Exchange Commission (“SEC”) issued guidance on subsection (b)(3)(i), the (“Reporting Exception”), of SEC Rule 204A. The rule states that registered investment adviser “access persons” (employees with access to non-public information regarding securities transactions or those who are involved in making securities recommendations to clients) must report all […]

SEC Issues Custody Rule Relief for Fund Managers

Earlier this year, the Securities and Exchange Commission (“SEC”)issued a no-action letter in response to a request by 16thAmendment Advisors LLC (“16th Amendment”) regarding the independent verification and financial statement provisions of Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-2 (the “Custody Rule”). For background on the Custody Rule, read our […]