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Tag Archives: Investment Advisers Act

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

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

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

Cyber Attack Protection Steps for Investment Firms

By Kristen J. Mathews on Posted in Compliance, Hedge Funds, Private Equity, Private Equity Litigation, Regulation, Uncategorized, Venture Capital
We are reaching out to our investment firm clients to advise them of an email “spear phishing” scam that has targeted investment firms recently, attempting to lure their personnel into inadvertently revealing their email account credentials to criminal fraudsters, and making wire transfers to the criminal’s account instead of the intended account. There has been … 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

SEC Speaks: 2017 Enforcement and Exam Trends for Private Funds

By Joshua M. Newville, Anthony 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

SEC Staff Announces 2017 OCIE Examination Priorities

By Anthony Drenzek, Robert Leonard and Michael R. Hackett on Posted in Compliance, Examinations, Hedge Funds, OCIE, Private Equity, Regulation, SEC, Securities Law
On January 12, 2017, 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. The 2017 examination priorities are organized around three thematic areas: (i) examining matters of importance to retail investors; (ii) focusing on risks … Continue Reading

Six Reasons Why a Wholesale Repeal of Dodd-Frank is Unlikely

By Anthony Drenzek and Timothy W. Mungovan on Posted in Hedge Funds, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law
In the days following the November elections, U.S. President-elect Donald J. Trump promised that his Financial Services Policy Implementation team would be working to “dismantle” the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). However, a more recent account in the Wall Street Journal reported Mr. Trump’s transition team as tempering his promise in … Continue Reading

SEC Shake-Up: President-Elect Trump Expected to Make Key Appointments

By Michael R. Hackett, Timothy W. Mungovan, Joshua M. Newville and Anthony Drenzek on Posted in Business Development Companies, Compliance, Disputes, Examinations, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
In the wake of the election of Donald Trump as the 45th President of the United States, Mary Jo White has announced her intent to step down from her role as Chair of the Securities and Exchange Commission.  Chair White, the 31st and one of the longest-serving Chairs of the SEC, will be leaving her … Continue Reading

Whistleblower Alert – OCIE to Examine Registered Investment Advisers for Overbroad Confidentiality or Severance Agreements

By Robert Leonard, Michael Mavrides, Joshua M. Newville and Anthony Drenzek on Posted in Compliance, Disputes, Examinations, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Whistleblower
The SEC’s Office of Compliance Inspections and Examinations (OCIE) recently published a risk alert noting that the SEC exam staff intends to examine registrants’ compliance with the Dodd-Frank Act’s whistleblower provisions.  OCIE intends to examine registered advisers for compliance, in light of recent enforcement cases the SEC has filed based on violations of the Dodd-Frank … Continue Reading

OCIE By the Numbers and the Use of Big Data

By Joshua M. Newville and Anthony Drenzek on Posted in Compliance, Examinations, FINRA, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law
On October 17, 2016, Marc Wyatt, the Director of the SEC’s Office of Compliance, Inspection and Examinations, gave a keynote address to the National Society of Compliance Professionals titled: Inside the National Exam Program in 2016.  In addition to discussing his general perspective concerning the program, he provided some key statistics that help put OCIE’s … Continue Reading

SEC Announces Record Number of Investment Adviser Cases for FY 2016

By William Dalsen, Timothy W. Mungovan, Joshua M. Newville, Michael R. Hackett and Anthony 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

Private Fund Advisers Must Pay Close Attention to Nuances under Pay-to-Play Restrictions in Light of Upcoming Elections Nationwide

By Robert Leonard, Michael Mavrides, Christopher Wells, Michael Suppappola and Anthony Drenzek on Posted in Compliance, FINRA, Hedge Funds, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
As the elections approach nationwide, advisers to private investment funds with current or prospective state or local government entity investors should be mindful of political activities by their personnel which could raise concerns under existing pay-to-play regulations. While seemingly straightforward in application, the SEC’s pay-to-play regulations have the potential to present a number of complex … 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

SEC Adopts Higher Net Worth Threshold for Qualified Clients under the Advisers Act

By Anthony Drenzek, Michael Mavrides, Robert Leonard, Christopher Wells, Howard J. Beber, Sean J. Hill and Michael Suppappola on Posted in Compliance, Hedge Funds, Private Equity, Regulation, SEC, Securities Law
In an order dated June 14, 2016, the Securities and Exchange Commission (SEC) adopted its prior proposal to increase the net worth threshold for “qualified clients” under Rule 205-3 of the Investment Advisers Act of 1940 (the Advisers Act) from $2 million to $2.1 million. This adjustment is being made pursuant to a five-year indexing … Continue Reading

SEC Announces Settlement with Adviser Found to Have Acted as an Unregistered Broker

By Anthony Drenzek, Timothy W. Mungovan, Sean J. Hill and Michael R. Hackett on Posted in Compliance, Mergers & Acquisitions, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
The SEC is continuing its pattern of establishing “standards of conduct” for the private equity industry through speeches, enforcement actions, and public settlements. After foreshadowing its concerns in various speeches over the last three years, the SEC recently returned its attention to the “unregistered broker” issue.  In a settlement announced last week, the SEC asserted … Continue Reading

Application of the Joint Proposed Incentive Compensation Rule to Investment Advisers

By Anthony Drenzek on Posted in Compliance, Hedge Funds, Private Equity, Regulation, SEC, Securities Law, Venture Capital
On May 16, 2016, six federal agencies issued a joint release inviting public comment on a proposed rule to prohibit or condition certain incentive-based compensation arrangements. This proposed rule was mandated by section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) and is a revision of the proposed rule the agencies … Continue Reading

SEC Proposes Higher Net Worth Threshold for Qualified Clients under the Advisers Act

By Anthony Drenzek, Stephen T. Mears and Christopher Wells on Posted in Compliance, Hedge Funds, Private Equity, Regulation, SEC, Securities Law
On Wednesday, May 18, 2016, the U.S. Securities and Exchange Commission (SEC) proposed to increase the net worth threshold for qualified clients from $2 million to $2.1 million.  This proposed adjustment is being made pursuant to a five-year indexing adjustment required by §205(e) of the Investment Advisers Act of 1940 (the Advisers Act), as amended … Continue Reading
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