Investment Adviser Securities & Exchange Commission

News & Analysis as of

SEC Adopts Amendments to Form ADV

On August 25, 2016, the Securities and Exchange Commission (SEC) adopted amendments to Form ADV that are designed to provide additional information regarding advisers, including information about their separately managed...more

Form ADV Gets an Overhaul

On August 25, 2016, the Securities and Exchange Commission (“SEC”) modernized the reporting regime for investment advisers by adopting amendments to the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and...more

SEC Approves FINRA Pay-to-Play Rule

This week, on Thursday, August 25, 2016, the SEC approved FINRA Proposed Rules 2030 and 4580 (the Proposed Rules) as they had been proposed by FINRA. The Proposed Rules would impose pay-to-play restrictions and recordkeeping...more

Double-Check the Math: Advisers Should Not Provide Clients With Performance Data Created by Other Investment Managers Without...

In a series of enforcement actions this week, the SEC made it clear that investment advisers need to substantiate the performance records of investment management firms they recommend to their clients. In these cases,...more

SEC Updates Form ADV

The SEC has adopted final rules requiring investment advisers to provide additional information on Form ADV and other matters. The final rules: - require information about an investment adviser’s separately managed...more

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

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...more

SEC Busts Apollo for Disclosure and Supervisory Failures

The SEC charged four private equity fund advisers affiliated with Apollo Global Management for misleading fund investors about fees and a loan agreement and failing to supervise a senior partner who charged personal expenses...more

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

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...more

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

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...more

New Jersey Appellate Court Clarifies Definition of Compensation under Advisers Act

On August 12, 2016, the United States Court of Appeals for the Third Circuit affirmed the decision of the District Court of New Jersey and held in United States v. Everett C. Miller that the defendant was an “investment...more

Cybersecurity, Cyber Insurance: What Fund Directors Need to Know

Cyberattacks are attempts by hackers to damage, destroy and/or steal data from a computer network or system. From 2013 to 2015, more than 153.6 million people had information stolen in cyberattacks involving companies such as...more

SEC Increases Net-Worth Test of the Qualified Client Standard

Effective August 15, 2016, the Securities and Exchange Commission (SEC) is increasing the net-worth test of the “qualified client” standard from $2 million to $2.1 million. Registered investment advisers that charge...more

The Increasing Gatekeeper Liabilities of Fund Administrators

There is a noticeable trend in the fund services industry that is creating increased exposure and legal liability for fund administrators. More and more, fund administrators are now being looked to as gatekeepers in order to...more

SEC Issues Order Raising Threshold for Net Worth Test to Adjust for Inflation

On June 14, 2016, the Securities and Exchange Commission (the “SEC”) issued an order, effective August 15, 2016, with respect to Rule 205-3 under the Investment Advisers Act of 1940 (the “Advisers Act”), raising the net worth...more

This Week In Securities Litigation

The SEC prevailed on summary judgment in an action centered on an offering fraud. The principals of the scheme were found to have violated the antifraud provisions while a codefendant was determined to have acted as an...more

SEC Proposes Business Continuity and Transition Plan Requirements for Investment Advisers; Staff Issues Guidance for Registered...

On June 28, 2016, the US Securities and Exchange Commission (SEC) proposed new Rule 206(4)-4 (Proposed Rule) under the Investment Advisers Act of 1940, as amended (Advisers Act) and also proposed amendments to certain...more

Impact of DOL’s Final Rule on Business Development Companies

On April 6, 2016, the U.S. Department of Labor (DOL) released its final rule defining who is a fiduciary in connection with investment advice that is provided to benefit plans subject to the Employee Retirement Income...more

Regulatory Musical Chairs for Money

The SEC and FINRA continue to play musical chairs with staff resources allocated to examinations of investment advisers and broker-dealers. According to SEC Chair Mary Jo White’s remarks at an April 16 SEC Compliance...more

SEC Announces Settlement with Investment Advisory Firm Regarding Alleged Failure to Disclose Costs to Investors

On July 14, 2016, the Securities and Exchange Commission announced the settlement of an enforcement action against RiverFront Investment Group (“RiverFront”), an investment advisory firm, for failing to properly prepare...more

SEC Committee Recommends Investor-Specific Mutual Fund Cost Disclosures

In mid-April, the SEC’s Investor Advisory Committee (IAC) issued a recommendation that the SEC "explore ways to improve mutual fund cost disclosures." As a first step, the IAC urges the SEC to require that periodic...more

Proposed Rule Relates to Investment Advisers' Business Continuity and Transition Plans

The Securities and Exchange Commission (“SEC”) recently proposed Rule 206(4)-41 under the Investment Advisers Act of 1940 (“Advisers Act”), which would require registered investment advisers (“firms” or “Advisors”) to adopt...more

Financial Services Weekly News - July 2016 #3

Regulatory Developments - SEC Proposes Amendments to Update and Simplify Disclosure Requirements as Part of Overall Disclosure Effectiveness Review - On July 13, the Securities and Exchange Commission (SEC) proposed...more

Securities Enforcement: 2016 Mid-Year Review

The Securities and Exchange Commission (the SEC or the Commission) brought over 400 enforcement actions in the first half of 2016 and is on pace to surpass its record of 807 enforcements actions in a single fiscal year, which...more

SEC Proposes Rule Requiring Investment Advisers to Adopt Business Continuity and Transition Plans; Division of Investment...

The U.S. Securities and Exchange Commission (SEC) on June 28, 2016, proposed new Rule 206(4)-4 (Proposed Rule) under the Investment Advisers Act of 1940 (Advisers Act). The Proposed Rule would require every SEC-registered...more

ERISA Fiduciary Rules: Court Challenges and Considerations for Employers

Employers and their financial advisors should consider enacting a multi-step plan amid anticipation that the proposed ERISA Fiduciary Rules turn effective. Last month, several business groups filed a complaint in the...more

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