Joshua M. Newville
Partner
Joshua M. Newville is a partner in the Litigation Department in New York and a member of Proskauer's White Collar Defense & Investigations Group and the Asset Management Litigation team.
Josh handles securities litigation, enforcement and regulatory matters, representing corporations and senior executives in civil and criminal investigations. In addition, Josh advises registered investment advisers and private fund managers on regulatory compliance, SEC exams and related risks.
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With more people working remotely than ever before in light of COVID-19, firms in the private equity and hedge fund space should review their Regulation S-P privacy and information-safeguarding policies to ensure they are compliant and ready for a prolonged period of remote work. In particular, in view of SEC guidance, firms should focus on … Continue Reading
In a cautionary tale about the career-limiting risks of SEC sanctions, a private fund adviser and its owner were found to have misused over $1 million of fund assets, resulting in a bar from the investment industry as well as a civil penalty. Monsoon Capital, LLC (Monsoon) is an SEC-registered investment adviser founded and owned … Continue Reading
The SEC has been active in the private equity space recently after being relatively quiet for some time. A recent enforcement action serves as a reminder for fund sponsors that regulators are continuing to look at fund sponsors’ practices relating to “operating partners,” particularly in the context of disclosures to limited partners.… Continue Reading
Though SEC scrutiny of performance results in fund marketing materials is nothing new, a recent settlement order suggests that the Commission continues to closely examine representations in marketing materials with respect to past investment performance. Old Ironsides Energy, LLC, a Boston-based registered investment adviser, agreed to pay a $1 million penalty to settle SEC charges … Continue Reading
Going into 2020, we expected scrutiny over valuation methods to be one of the top regulatory risks for private funds. With ongoing economic uncertainty applying pressure, the SEC will continue to focus on valuation issues surrounding portfolio investments. Fund audit firms are not immune to regulatory scrutiny involving their professional obligations with respect to fund … Continue Reading
The impact of the global coronavirus (COVID-19) outbreak has been rapidly evolving, causing disruption in global commerce across a wide range of industries. Private fund managers are not immune to the disruption. According to PitchBook’s latest analysis, private equity and venture capital still have record amounts of dry powder ($2.4 trillion) to weather the storm … Continue Reading
Last month the SEC brought an enforcement action illustrating how cross trades can trip up a manager of a private fund. The SEC’s settlement with investment manager Lone Star Value Management LLC was based on allegations that the manager carried out a series of cross trades among funds it managed without disclosing to the client … Continue Reading
Last year, we highlighted the risks of filing a Section 220 books and records request post-litigation, citing a case where the Delaware Chancery Court found that such use was an improper attempt to “sue first, ask questions later.” Recently, the Delaware Chancery Court opined on this issue again in Lebanon County Employees’ Retirement Fund v. … Continue Reading
On January 13, 2020, the United States Supreme Court denied certiorari to an appeal of a June 2019 order from the United States Court of Appeals for the D.C. Circuit that dismissed an action seeking to invalidate certain under the First Amendment, among other arguments. This denial leaves in place a ruling in favor of … Continue Reading
The private fund industry is more in the public eye than ever before. Private capital and private markets have experienced massive growth over the last two decades, substantially outpacing the growth of public equity. We have witnessed that trend continue during the past year, and have worked with our clients to navigate the greater uncertainty … Continue Reading
Since the Second Circuit’s 2014 decision in United States v. Newman triggered a debate about the personal benefit requirement, several bills have been introduced in Congress to define insider trading. The most recent effort is H.R. 2534, the Insider Trading Prohibition Act, which the House of Representatives passed overwhelmingly last week. The bill would codify certain … Continue Reading
Under rule 206(4)-2 of the Advisers Act, otherwise known as the Custody Rule, it is a fraudulent practice for a registered investment adviser to have custody of client funds or securities, unless the adviser takes certain required steps to protect the assets. Over the past year the SEC’s Enforcement division has been relatively active investigating … Continue Reading
In a series of enforcement cases over the past few months, the SEC has continued to bring actions focused on undisclosed fees charged to clients. Many of these cases have charged firms with fraud and other violations based on fees that were not adequately disclosed. While some attention has focused on retail wealth managers, institutional … Continue Reading
Yesterday the SEC announced its enforcement results for FY 2019, accompanied by a report from the Co-Directors of its Division of Enforcement. While the total number of actions increased slightly from 2018, the percentage of cases involving investment advisers or investment companies increased more dramatically, growing from 22% in 2018 to 36% in 2019, with … Continue Reading
A settlement last week involving a private equity fund sponsor is a reminder that compliance with fee calculation provisions and valuation policies and procedures are crucially important for fund managers. Even when an error is the result of simple negligence, the SEC will take enforcement action when fee calculations do not strictly comply with the … Continue Reading
A recent case in a North Dakota district court is a reminder to private equity funds and managers that, under certain conditions, they may be held responsible for actions of a fund’s portfolio companies. Courts allow plaintiffs to pierce the corporate veil as a check against improper abuse of the corporate form. When one corporate … Continue Reading
Recently, a group of Congress members introduced into Congress Senate Bill 2155 named the Stop Wall Street Looting Act of 2019. Although unlikely to be enacted into law as drafted, this proposed legislation would directly and substantially affect a number of fundamental operational aspects of private equity funds and their affiliates.… Continue Reading
Today, we are launching a proprietary database tracking all SEC enforcement actions involving private equity advisers. The tracker contains key information from the actions, including summaries of key issues, settlement terms, and relevant statutory provisions. The tracker will be an important resource for us and our clients, providing us with quick access to comparable cases … Continue Reading
On July 3, 2019, SEC Chairman Jay Clayton issued a “Statement Regarding Offers of Settlement” (the “Statement”), announcing important changes to how the SEC will consider future requests for waivers from disqualifications in settlements. The Statement may have been prompted by the Bad Actor Disqualification Act of 2019 recently proposed by Representative Maxine Waters. Regardless … Continue Reading
A recent action where the SEC focused on the presumably conservative undervaluation of assets suggests that it is more than willing to use valuation as a hook to deter “smoothing” of returns. As we previously noted, while the SEC consistently announces that valuation is a “key area of focus,” it is uncommon for regulators to … Continue Reading
The DC Circuit recently released an opinion addressing the SEC’s administrative findings against registered investment adviser The Robare Group (TRG) for failure to disclose alleged conflicts of interest. Although the court affirmed the SEC’s finding of a violation of Section 206(2) of the Advisers Act, it held that Commission could not find willful violations under … Continue Reading
Last week the SEC announced a settlement of fraud claims against the founder of Jumio, Inc, a private mobile payments company, for misstating the company’s financial results and using those financials to sell his company shares on the secondary market. This case is a reminder that privately negotiated securities transactions and private, VC-funded companies are … Continue Reading
An increasingly sophisticated and active OCIE division, innovative market disruptors, a maturing credit cycle, and a philosophical change in how the private fund industry views and utilizes litigation are likely to lead to increased regulatory scrutiny and litigation risk for advisers (and their funds) in 2019. With that backdrop, we are pleased to present our … Continue Reading
While the SEC consistently announces that valuation is a “key area of focus,” it is uncommon for regulators to “second guess” valuation determinations in the absence of other potential violations. However, recent actions would suggest that the SEC is particularly interested in the valuations and methodologies behind illiquid securities. As we have noted here before, … Continue Reading
Privacy in the Time of Pandemic: COVID-19 Provides Opportunity to Revisit Regulation S-P Privacy Policies
Misuse of Private Fund Assets Leads to SEC Enforcement and Industry Bar for Fund Manager
Who Foots the Bill? SEC Cracks Down on Operating Partner Reimbursement Disclosures
Fund Adviser Receives $1 Million Penalty For Alleged Performance Misstatements in Private Fund Marketing Material
SEC Targets Fund Auditor in Latest Battle Over Valuation Practices
By Adam L. Deming, Joshua M. Newville and Samuel J. Waldon on Posted in Private Equity, Regulation, SEC, Securities Law
Coronavirus Disruption: Regulatory and Litigation Risks for Private Fund Managers
When is a Cross Trade a Principal Trade? SEC Brings Enforcement Action Against a Fund Manager That Appears not to Have Understood
By Robert E. Plaze, Joshua M. Newville and Lucy C. Wolf on Posted in Compliance, Hedge Funds, OCIE, Private Equity, Regulation, SEC, Securities Law
Vice Chancellor Veers Away from Delaware Section 220 Precedent
U.S. Supreme Court Denies Bid to Review Dismissal of Challenge to Pay-To-Play Rule
By Adam L. Deming, Anthony M. Drenzek, Michael R. Hackett, Joshua M. Newville, Robert E. Plaze and Samuel J. Waldon on Posted in Disputes, FINRA, SEC
Top Ten Regulatory and Litigation Risks for Private Funds in 2020
By Margaret A. Dale, Michael R. Hackett, Kirsten E. Lapham, Timothy W. Mungovan, Joshua M. Newville, Seetha Ramachandran, Samuel J. Waldon, Jonathan M. Weiss, Anthony M. Drenzek, James Anderson, Alexandra V. Bargoot, William D. Dalsen, Adam L. Deming, David W. Heck, Brian A. Hooven, Christina H. Kroll, Hena M. Vora and Lucy C. Wolf on Posted in Business Development Companies, Compliance, Disputes, Examinations, Hedge Funds, Mergers & Acquisitions, OCIE, Private Credit, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital, White Collar
House Passes Proposed Legislation Defining Insider Trading
By Jonathan Richman and Joshua M. Newville on Posted in Compliance, Hedge Funds, SEC, Securities Law
SEC clamps down on Custody Rule
SEC Enforcers Continue to Focus on Undisclosed Fees
By Joshua M. Newville and Brian A. Hooven on Posted in Compliance, OCIE, Regulation, SEC, Securities Law, Uncategorized
SEC Releases FY 2019 Enforcement Results: Increases in Investment Adviser Actions and Maintained Focus on Individual Accountability
Fund Sponsor’s Fee Calculation Mistake Leads to SEC Enforcement
By Joshua M. Newville, Samuel J. Waldon and Lucy C. Wolf on Posted in Regulation, SEC, Securities Law
Veil-Piercing Risks for Private Equity Managers Highlighted in Recent Court Decision
Proposed Senate Bill Would Significantly Impact Certain Private Funds and Their Affiliates
Proskauer Launches Private Equity SEC Enforcement Tracker
SEC Announces New Approach to Disqualification Waivers
By Samuel J. Waldon, Karen J. Garnett, Joshua M. Newville and Robert E. Plaze on Posted in Regulation, SEC, Securities Law
SEC Fines Fund Manager $5 Million Over Undervaluation of Assets
By Joshua M. Newville and Brian A. Hooven on Posted in Compliance, Disputes, Hedge Funds, Regulation, SEC, Securities Law
DC Circuit Opinion Reaffirms Fiduciary and Disclosure Obligations of Advisers While Rejecting SEC Finding of “Willful” Violations
Fraud Claims Against Startup Founder Involving Secondary Market Sales Demonstrate SEC Focus on Privately-Held Companies
By Joshua M. Newville and Brian A. Hooven on Posted in Compliance, Disputes, Regulation, SEC, Securities Law, Venture Capital
The Top Ten Regulatory and Litigation Risks for Private Funds in 2019
By Timothy W. Mungovan, Samuel J. Waldon, Joshua M. Newville, Michael R. Hackett, Anthony M. Drenzek, William D. Dalsen, Brian A. Hooven, Alexandra V. Bargoot, Lucy C. Wolf and Hena M. Vora on Posted in Compliance, Disputes, Examinations, Hedge Funds, Mergers & Acquisitions, OCIE, Private Credit, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Uncategorized, Venture Capital
