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Proskauer on Private Fund Litigation

Tag Archives: Controls

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
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

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
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

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
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

WSJ Article on Geolocation Data Highlights Risks for Fund Managers

By Joshua M. Newville and Jeffrey Neuburger on Posted in Compliance, Hedge Funds, Regulation
On Friday, the WSJ published an article detailing how companies are monetizing smartphone location data by selling it to hedge fund clients.  The data vendor featured in the WSJ article obtains geolocation data from about 1,000 apps that fund managers use to predict trends involving public companies.  However, as we’ve noted, the use of alternative … Continue Reading

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

By Joshua M. Newville, Robert E. Plaze and Anthony M. 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

SEC Speaks: 2017 Enforcement and Exam Trends for Private Funds

By Joshua M. Newville, Anthony M. Drenzek and Michael R. Hackett on Posted in Compliance, Disputes, Examinations, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
At the recent SEC Speaks program, sponsored by PLI, senior SEC staff members provided valuable insight into the SEC’s 2017 priorities for private funds.  While the tenor of this year’s discussion seemed to focus more on retail investors, the staff discussed several topics that private fund advisers should keep in mind from both an enforcement … Continue Reading

The Top Ten Regulatory and Litigation Risks for Private Funds in 2017

By Timothy W. Mungovan, Joshua M. Newville, Michael R. Hackett, Anthony M. Drenzek and William D. Dalsen on Posted in Business Development Companies, Compliance, Disputes, Examinations, Fund Restructurings, Hedge Funds, Mergers & Acquisitions, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital, Whistleblower
Private investment funds and advisers are likely to face new regulatory challenges and increased litigation risks in 2017, not only because of a change in the administration, but also because many advisers have not corrected and aligned past practices with current regulatory guidance.  In this post, we have highlighted ten areas that should be on … Continue Reading

SEC Announces Record Number of Investment Adviser Cases for FY 2016

By William D. Dalsen, Timothy W. Mungovan, Joshua M. Newville, Michael R. Hackett and Anthony M. Drenzek on Posted in Compliance, Disputes, Hedge Funds, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital, Whistleblower
The Securities and Exchange Commission today announced its enforcement results for fiscal year 2016, reaching new highs in the number of actions filed and money ordered forfeited through disgorgement and penalties.  The SEC noted that it brought the most ever cases involving investment advisers or investment companies, including 8 enforcement actions related to private equity advisers, an area … Continue Reading

Putting a Premium on Illiquidity: Some Reflections on the SEC’s Scrutiny of Valuation Practices and Disclosures

By Joshua M. Newville, Michael R. Hackett and Timothy W. Mungovan on Posted in Compliance, Disputes, Hedge Funds, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
Valuation is typically near the top of the list when the SEC’s enforcement division and exam staff disclose their priority topics for private funds.  We expect that trend to continue and, if anything, the focus on valuation is likely to increase, especially as the market for unicorns shakes out. That said, the SEC rarely challenges … Continue Reading

Webcast: The New Regulatory Landscape for Financial Institutions

By Timothy W. Mungovan on Posted in Compliance, Disputes, FINRA, Hedge Funds, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
Is your organization equipped to stay on top of regulator demands?  Join Proskauer’s Tim Mungovan, co-head of the Private Equity & Hedge Fund Litigation Group, and Marsh’s FINPRO U.S. Chief Innovation Officer Machua Millett on June 15 at 2:00 p.m. ET for a webinar on the new regulatory landscape for financial institutions. The webcast will … Continue Reading

Theranos, the SEC’s Pursuit of Unicorns, and Taking the Reins of Internal Controls

By Joshua M. Newville and Michael R. Hackett on Posted in Compliance, Disputes, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
In the wake of a host of negative developments, Theranos Inc. is reportedly under investigation by the Department of Justice and the Securities and Exchange Commission.  The SEC and DOJ inquiries are likely to focus on whether Theranos misled investors about the state of its technology and operations.  Even beyond potential misrepresentation issues, we believe … Continue Reading

Regulatory Compliance Association’s Enforcement, Compliance & Operations (ECO) 2016 Symposium

By Timothy W. Mungovan and Christopher Wells on Posted in Compliance, Disputes, Hedge Funds, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
Partners Timothy W. Mungovan (co-head of Private Equity & Hedge Fund Litigation Group) and Christopher M. Wells (head of Hedge Funds Group)  have been invited to join a large collection of senior regulators at the Regulatory Compliance Association’s Enforcement, Compliance & Operations (ECO) 2016 Symposium.  The conference will take place on Tuesday May 17 at … Continue Reading

SEC Staff Announces 2016 OCIE Examination Priorities

By Timothy W. Mungovan and William D. Dalsen on Posted in Compliance, Private Equity, Regulation, SEC
On January 11, 2016, the staff of the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission (SEC) released its annual announcement on examination priorities in the coming calendar year. While the announcement contains broad and general descriptions of areas in which the staff intends to focus, there are several key … Continue Reading
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