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Category Archives: Securities Law

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SEC Enforcement Co-Director Gives Guidance for Wells Process, Part 2

By Samuel J. Waldon, Joshua M. Newville and Brian Hooven on Posted in SEC, Securities Law, White Collar
On June 4, we posted a summary of SEC Enforcement Co-Director Steven Peikin observations during his recent keynote address at the New York City Bar Association’s 7th Annual White Collar Crime Institute.  Co-Director Peikin imparted a few suggested “do’s and don’ts” for effective communication with the SEC during the Wells process.  Although Co-Director Peikin’s suggestions should serve as helpful … Continue Reading

SEC Enforcement Co-Director Gives Guidance for Wells Process

By Samuel J. Waldon, Joshua M. Newville and Brian Hooven on Posted in SEC, Securities Law
During his recent keynote address at the New York City Bar Association’s 7th Annual White Collar Crime Institute, SEC Enforcement Co-Director Steven Peikin imparted a few suggested “do’s and don’ts” for effective communication with the SEC during the Wells process—typically the last opportunity to address potential charges prior to the authorization of a SEC enforcement … Continue Reading

Unicorns: The Tale Continues

By Joshua M. Newville, William Dalsen and Alexandra V. Bargoot on Posted in Compliance, Disputes, Examinations, Mergers & Acquisitions, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
Potential disputes involving unicorns have been a hot topic for the last several years.  We predicted that would continue this year in in our webinar and related blog post: The Top Ten Regulatory and Litigation Risks for Private Funds in 2018.  In April, the Regional Director of the SEC’s San Francisco office, Jina Choi, confirmed … Continue Reading

Regulatory Scrutiny of the ICO Market – What Fund Managers Should Know

By Joshua M. Newville, Anthony Drenzek and Brian Hooven on Posted in Compliance, Disputes, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
Last week, former CFTC Chairman Gary Gensler explained in remarks at M.I.T. that he believes the second and third most widely used virtual currencies—Ether and Ripple—may have been issued and traded in violation of securities regulations. This comes on the heels of a crackdown on cryptocurrency-related securities by the SEC, which is particularly focused on … Continue Reading

SEC Settles with Private Equity Fund Adviser over Alleged Conflicts of Interest

By Anthony Drenzek and Michael R. Hackett on Posted in Compliance, Disputes, Examinations, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law
As a sign that the SEC is continuing to actively pursue private equity fund advisers, on April 24, 2018, the SEC announced a settlement with private equity fund adviser WCAS Management Corporation (WCAS) related to allegations of undisclosed conflicts of interest. The specific conflicts resulted from an allegedly undisclosed contractual arrangement whereby a portion of … Continue Reading

SEC Staff Issues Risk Alert on the Six Most Frequent Fee and Expense Compliance Issues

By Robert E. Plaze, Joshua M. Newville, Robert Leonard and Anthony Drenzek on Posted in Compliance, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
On April 12, 2018, the SEC’s Office of Compliance Inspections and Examinations issued a risk alert listing the most common compliance issues concerning fees and expenses charged by SEC-registered investment advisers.  Advisers should review their practices, policies and procedures to ensure compliance with their advisory agreements and representations to clients in light of the fee … Continue Reading

Proskauer Adds Former SEC Enforcement Counsel, Samuel Waldon, As Partner Strengthening Its Securities Litigation Offering

By Timothy W. Mungovan on Posted in Compliance, Disputes, Examinations, Hedge Funds, OCIE, Private Credit, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital, Whistleblower
We are pleased to announce that partner Samuel Waldon has joined Proskauer’s Litigation Department in DC, enhancing the Firm’s securities litigation and regulatory enforcement practices.  Among his other areas of focus, Sam will bolster the firm’s Asset Management Litigation team. “In today’s ever evolving regulatory landscape, Sam’s extensive experience at the SEC and his deep … Continue Reading

SEC Announces 2018 Compliance Outreach Program Seminar for Investment Advisers and Investment Companies

By Anthony Drenzek on Posted in Compliance, OCIE, Private Equity Litigation, Regulation, SEC, Securities Law
On Tuesday, February 13th, the Securities and Exchange Commission (SEC) announced the opening of registration for its 2018 national compliance outreach seminar for investment companies and investment advisers. The event is intended to help Chief Compliance Officers (CCOs) and other senior personnel at investment companies and investment advisory firms to enhance their compliance programs. … Continue Reading

The Top Ten Regulatory and Litigation Risks for Private Funds in 2018

By Timothy W. Mungovan, Joshua M. Newville, Michael R. Hackett, Anthony Drenzek, William Dalsen, Alexandra V. Bargoot, Brian Hooven and Lucy Wolf on Posted in Business Development Companies, Compliance, Disputes, Examinations, Hedge Funds, Mergers & Acquisitions, Private Credit, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
With the public equity markets at an all-time high and private equity fund raising setting new records, it might seem counterintuitive to forecast litigation and regulatory risks.  The opposite is true.  Disputes typically follow capital, and the steeper the growth curve, the greater the risk of litigation and regulatory scrutiny.  With that backdrop, we are … Continue Reading

Chairman Clayton Asks Lawyers to Knock it Off with the Unregistered Coin Offerings

By Joshua M. Newville and Jeffrey Neuburger on Posted in Hedge Funds, Private Equity Litigation, Regulation, SEC, Securities Law
In his recent remarks at the Securities Regulation Institute, SEC Chairman Jay Clayton had some stern words for market professionals, especially lawyers, involved in initial coin offerings (ICOs).  He expressed concern that lawyers in the space “can do better” in their role as gatekeepers to the securities markets, particularly in advising clients whether the “coin” … Continue Reading

Proskauer Private Investment Funds Group Releases Annual Review and Outlook

By Anthony Drenzek and Michael R. Hackett on Posted in Compliance, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
Proskauer’s Private Investment Funds Group recently released its 2017 Annual Review and Outlook for Hedge Funds, Private Equity Funds and Other Private Funds.  This yearly publication provides a summary of some of the significant changes and developments that occurred in the past year in the private equity and hedge funds space, as well as certain … Continue Reading

SEC Releases FY 2017 Enforcement Results: Maintaining Focus on Individual Accountability and Investment Advisers

By Joshua M. Newville, Michael R. Hackett, Anthony Drenzek and Alexandra V. Bargoot on Posted in Compliance, Hedge Funds, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law
Last night, the SEC announced its enforcement results for the Fiscal Year 2017, accompanied by a report from the Co-Directors of its Division of Enforcement.  While the total number of actions was down slightly from 2016, the percentage of those cases involving investment advisers or investment companies – 18% – remained consistent, and amounted to … Continue Reading

U.S. House Bill Aims to Curtail SEC Staff’s Ability to Obtain Algorithmic Trading Source Code

By Christopher Wells, Robert Leonard, Michael Mavrides, Joshua M. Newville, Anthony Drenzek and Lucy Wolf on Posted in Compliance, Hedge Funds, OCIE, Private Equity Litigation, Regulation, SEC, Securities Law
On October 4, 2017, U.S. Representative Sean P. Duffy [R-WI-7] introduced U.S. House of Representatives Bill H.R.3948 entitled the “Protection of Source Code Act.” If enacted, the Bill would amend the Securities Act, the Securities Exchange Act, the Investment Company Act and the Investment Advisers Act to prohibit the SEC staff from obtaining algorithmic trading … Continue Reading

Pay-to-Play – SEC Expands Scope of Rule to CABs

By Lucy Wolf, Anthony Drenzek, Michael R. Hackett and Joshua M. Newville on Posted in Compliance, Examinations, FINRA, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
The SEC’s pay-to-play rule has given advisers reason to worry about potential foot faults since its adoption. As we have noted in prior posts, the rule is filled with landmines and is therefore difficult to navigate.  As was evident from the SEC’s announcement of a series of settlements of alleged pay-to-play violations in early 2017, even … Continue Reading

Veil-Piercing Under California Law – Heightened Risks for Fund Managers

By Manuel F Cachán, Joshua M. Newville and Lee Popkin on Posted in Disputes, Private Equity, Private Equity Litigation, Securities Law, Venture Capital
We recently posted about the risks associated with veil-piercing claims and the ways in which fund managers can protect themselves from exposure to these claims. Our first post on veil-piercing focused on Delaware standards, while this post discusses California law. California law differs in several important respects from Delaware law on this topic. If a … Continue Reading

SEC Flags the Top Six Advertising Rule Deficiencies for Investment Advisers

By Stephen T. Mears, Robert E. Plaze, Christopher Wells, Anthony Drenzek, Joshua M. Newville and Michael R. Hackett on Posted in Compliance, OCIE, Regulation, SEC, Securities Law
The SEC staff recently published an alert highlighting the most common deficiencies seen in investment advisers’ marketing materials.  Based on its recent examinations and initiatives, the Office of Compliance Inspections and Examinations (OCIE) issued its risk alert to highlight compliance issues relating to Rule 206(4)-1 (the “Advertising Rule”).  Here are the top six: Misleading Performance … Continue Reading

SEC Speaks on Initial Coin Offerings: Tokens May Be Securities

By Jeffrey Neuburger, Joshua M. Newville and Alexandra V. Bargoot on Posted in Compliance, Examinations, Hedge Funds, News, Private Equity, Regulation, SEC, Securities Law
Initial Coin Offerings (“ICOs”) are generating attention from both investors and the SEC. Investors’ interest is indicated by the more than $1.2 billion that ICOs reportedly have raised so far this year.  Meanwhile, the SEC has recently asserted its authority in the space, releasing a report stating that digital tokens issued by ICO platform “The … Continue Reading

SEC Chairman Identifies Guiding Principles

By Anthony Drenzek, Joshua M. Newville and Michael R. Hackett on Posted in Compliance, OCIE, Private Equity Litigation, Regulation, SEC, Securities Law
On July 12, 2017, newly appointed SEC Chairman Jay Clayton delivered a speech at the non-partisan Economic Club of New York wherein he set forth several high-level guiding principles for the agency.  In general, these remarks focused on (i) ensuring protections for retail investors, (ii) positioning the SEC as a regulator which is able to … Continue Reading

Best Practices for Fund Managers to Mitigate Big Data and Web Scraping Risks

By Joshua M. Newville, Jeffrey Neuburger, Robert Leonard and Jonathan Richman on Posted in Hedge Funds, Regulation, SEC, Securities Law
Proskauer partners Jeff Neuburger, Robert Leonard, Josh Newville and Jonathan Richman recently invited hedge fund executives to discuss the complex regulatory and compliance issues raised by the use of alternative data.   Jeff, Robert and Josh also contributed an article to the Hedge Fund Law Report on Best Practices for Private Fund Advisers to Manage the Risks of … Continue Reading

Valuation of Illiquid Portfolio Investments – Avoiding Regulatory Risks with Form and Substance

By Joshua M. Newville, Timothy W. Mungovan and Anthony Drenzek on Posted in Compliance, Disputes, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
For private fund managers, the valuation of privately-held securities has been subject to heightened regulatory scrutiny. As the IPO on-ramp for private “unicorn” investments has lengthened, fund managers may hold illiquid investments for longer-than-expected time periods—and valuation-related risks increase as the time lengthens between purchase and exit.  This is the second of two blog posts … Continue Reading

SEC Continues to Use Advanced Data Analytics to Investigate Insider Trading

By Joshua M. Newville and Julia M. Ansanelli on Posted in Regulation, SEC, Securities Law
The SEC has been active in pursuing several insider trading cases this year on both the large and the small-scale, some of which involved trades that yielded profits as small as $40,000-$60,000. Why does the enforcement division spend resources on these smaller cases? And how will the SEC continue to investigate new leads through data … Continue Reading

Reported Criminal Probes Regarding Bond Valuations Highlight the Importance of Valuation Procedures

By Joshua M. Newville, Robert E. Plaze and Anthony Drenzek on Posted in Compliance, Disputes, Examinations, Hedge Funds, Private Equity, Regulation, SEC, Securities Law
According to recent news reports, the DOJ and the SEC are investigating the possible improper use of third-party broker quotes by hedge fund managers to value illiquid debt securities in their portfolios. Prosecutors are reportedly focused on possible instances where fund managers allegedly solicited predetermined or improper quotes from brokers, and used those estimates to … Continue Reading

Proskauer Releases Regulation of Investment Advisers, the Definitive Guide by Regulatory Expert Robert Plaze

By Robert E. Plaze, Timothy W. Mungovan and Joshua M. Newville on Posted in OCIE, Regulation, SEC, Securities Law, Uncategorized
We are pleased to announce that Proskauer has released Regulation of Investment Advisers by the U.S. Securities and Exchange Commission, by Robert E. Plaze, who recently joined Proskauer as a partner.  Bob previously served as Deputy Director of the Division of Investment Management of the SEC.  This publication, which draws on Bob’s nearly 30 years … Continue Reading

SEC Announces 2017 Compliance Outreach Program Seminars for Investment Companies and Investment Advisers

By Anthony Drenzek on Posted in Compliance, Examinations, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
On Thursday, March 23rd, the Securities and Exchange Commission announced the opening of registration for its compliance outreach program seminars for investment companies and investment advisers.  The seminars will be offered in four U.S. cities and are intended to help Chief Compliance Officers (CCOs) and other senior personnel enhance compliance programs at investment companies and … Continue Reading
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