Investment Advisers Act of 1940

News & Analysis as of

Hedge Fund Seeks Absolution from the SEC Claiming the Potential Pay-to-Play Penalty Doesn’t Fit the Violation

Pershing Square Capital Management has found itself in the unenviable position of having to seek absolution from the Securities and Exchange Commission for the consequences of an unintended $500 pay-to-play error by one of...more

California’s Private Fund Adviser Exemption

Before the enactment of the Dodd-Frank Act in 2010, many advisers to alternative investment vehicles, such as hedge funds, private-equity funds, and venture capital funds relied on the Section 203(b)(3) exemption from...more

SEC Principal Trading Rule Exemption Set to Expire at Year’s End

The staff of the U.S. Securities and Exchange Commission (SEC) stated in August that it intends to permit the expiration of rule 206(3)-3T (Rule) under the Investment Adviser Act of 1940 (Advisers Act). The SEC originally...more

The Trump Administration: Change By Appointment

The election of Donald J. Trump as the 45th President of the United States, along with the Republican control of the majority of both the House of Representatives and the Senate, will likely result in significant changes in...more

New FINRA Capital Acquisition Broker Rules May Offer Limited Relief to Private Investment Fund Advisers

The U.S. Securities and Exchange Commission (“SEC”) recently approved a Financial Industry Regulatory Authority (“FINRA”) proposal to adopt a new regime for the regulation of electing broker-dealer firms that meet the...more

The Commission’s Latest Message Case on Investment Adviser Conflict Disclosure

For any investment adviser who has not lived in a cave the last few years, the SEC’s focus on conflicts of interest in the investment management industry comes as no surprise. More than a half century ago, the Supreme Court...more

Court Dismisses Claims Alleging that Yahoo Is Illegally Acting as an Unregistered Investment Company

Recently, the United States District Court for the Northern District of California (the “Court”) dismissed claims against Yahoo, Inc., holding that a 16-year old exemption granted to Yahoo by the Securities and Exchange...more

SEC to Focus on Firms Hiring Those with Disciplinary History

SEC’s Office of Compliance Inspections and Examinations (OCIE) has recently issued a risk alert to registered investment advisers indicating their intent to focus on compliance oversight and controls with respect to the...more

Investment Management Update - October 2016

Investment Adviser AXA Wins Excessive Fee Trial - A federal judge in New Jersey has ruled in favor of AXA Equitable Life Insurance Company (AXA Equitable) and its wholly owned subsidiary, AXA Equitable Funds Management...more

Mutual Fund Sales by Intermediaries – Fall-Out from DOL Fiduciary Rule and FINRA Enforcement

Mutual fund sales and distribution arrangements are once again under review. It has been reported that fund intermediaries are re-examining their practices relating to sales charges, share class structures and product...more

SEC's Focus on Private Equity Firms Continues with Recent Action

A settled enforcement action, announced by the U.S. Securities and Exchange Commission (SEC) on September 14, 2016, continues the trend of increased SEC scrutiny of private equity advisers concerning the allocation and...more

Regulatory Update and Recent SEC Enforcement Actions

On June 2, 2016, the SEC announced that it hired Christopher R. Hetner, a cybersecurity expert, as the Senior Adviser to the Chair for Cybersecurity Policy. The hire is indicative of the SEC’s focus on cybersecurity measures...more

The Evolution of Advice: Digital Investment Advisers as Fiduciaries

The landscape for investment advice is shifting, and an innovative model has emerged that combines technology and investment expertise to deliver high-quality advice at a lower cost than traditional investment advisory...more

SEC Amendments to Form ADV and Advisers Act Rules Change Investment Adviser Reporting Requirements

Proposals made by the Securities and Exchange Commission (SEC) in 2015 to amend Form ADV and certain rules under the Investment Advisers Act of 1940 (Advisers Act) (SEC Proposes Significant Reporting Requirement Amendments to...more

SEC Adopts Changes Impacting Private Fund Advisers

The SEC’s recently-adopted changes to Form ADV and Rule 204-2 of the Investment Advisers Act of 1940, as amended (the so-called “books and records rule”), raise important considerations for many private fund advisers –...more

House Bill Would Ease Regulatory Restrictions to Private Fund Advisers

On September 9, 2016, the U.S. House of Representatives approved a bill that would amend the Investment Advisers Act of 1940 to modernize certain disclosure requirements and lessen regulatory burdens on private fund advisers....more

SEC Amends Form ADV and Investment Adviser Recordkeeping Rules

The U.S. Securities and Exchange Commission (SEC) recently adopted amendments to Form ADV and to Rule 204-2 (Recordkeeping Rule), as well as technical amendments to other rules under the Investment Advisers Act of 1940...more

Investment Management Update

The Securities and Exchange Commission Adopts Amendments to Form ADV and Investment Adviser Act Rules - The Securities and Exchange Commission (SEC) adopted amendments to Form ADV and Investment Advisers Act of 1940...more

SEC Adopts Amendments To The Books And Records Rule And To Form ADV Addressing Separately Managed Accounts, Social Media, And...

On August 25, 2016, the Securities and Exchange Commission (the “SEC”) adopted amendments to rules promulgated under the Investment Advisers Act of 1940 (the “Advisers Act”) and the investment adviser registration and...more

House Debate Scheduled for Bills Relating to Capital Access for Small Business

Next week, the House is scheduled to debate two bills designed to reduce regulatory burden on small businesses in order to facilitate access to capital. H.R. 5424, the Investment Advisers Modernization Act, was approved by...more

SEC Amendments Require Advisers to Disclose More Information and Keep Additional Records

On August 25, 2016, the Securities and Exchange Commission (SEC) adopted amendments to Form ADV and to several rules under the Investment Advisers Act of 1940 (Advisers Act) (collectively, the Amendments). The SEC adopted the...more

SEC Enforcement Against Private Equity Firms - A Focus on Disclosure, Fees, and Conflicts of Interest

The Securities and Exchange Commission announced two settled enforcement actions against private equity fund advisers last week involving certain fee practices and potential conflicts of interest. Consistent with its...more

The SEC Adopts Amendments to Form ADV and Recordkeeping Rule: Advisers Now Required to Disclose Information About Separately...

The Securities and Exchange Commission (SEC) recently amended Form ADV to require investment advisers to disclose more information about their separately managed account business, aggregate data related to the use of...more

Court Rejects Excessive Fee Claims Following Trial on Mutual Fund “Manager of Managers” Theory

On August 25, a federal court in the District of New Jersey issued a much-anticipated decision, finding after a lengthy trial that shareholder plaintiffs failed to prove claims that AXA entities had charged excessive mutual...more

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

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