Investment Advisers Act of 1940

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 Adopts Amendments to Form ADV and Recordkeeping Rule

On August 25, 2016, the Securities and Exchange Commission (the “SEC”) adopted rules, proposed in May 2015, to modernize and enhance the disclosure requirements promulgated under the Investment Adviser Act of 1940, as amended...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

SEC Halts Scheme By IM Who Bilked Off-Shore Investment Manager

It can happen to anybody. The SEC has brought what seems like an almost endless string of investment fund and offering fraud actions. Typically small, unsophisticated investors, often known to the fraudster, are targeted with...more

ALJs are A-OK: D.C. Circuit Upholds Constitutionality of SEC In-House Courts

In several recent decisions we have covered, Federal Circuit Courts have unanimously ruled that respondents in an SEC enforcement action cannot bypass the Exchange Act’s review scheme by filing a collateral lawsuit in federal...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

D.C Circuit rejects constitutional challenge to SEC’s use of administrative law judges

A challenge to the constitutionality of the SEC’s use of administrative law judges (ALJ) was rejected by the U.S. Court of Appeals for the D.C. Circuit. In Raymond J. Lucia Companies, Inc. et al. v. Securities and Exchange...more

D.C. Circuit Rejects Challenge to Appointment of SEC ALJs

While the Commission’s venue selection determinations have been repeatedly challenged, each of the decisions in favor of the agency at the circuit court level has failed to reach the merits of the Constitutional claim....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

SEC Increases Performance Fee Net Worth Threshold for Qualified Clients

Effective August 15, 2016, the net worth threshold for qualified clients under Rule 205-3 is increased from $2 million to $2.1 million. If you have advisory agreements or subscription agreements that require a client or...more

The Financial Report, Volume 5, Number 14

Discussion and Analysis - As an increasing number of investment management firms experience financial distress, we often are asked whether there are any minimum capital requirements imposed on investment advisers....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

SEC Examiners Focused on Fund Share Class Conflicts of Interest

OCIE recently published a Risk Alert announcing that it will examine the potential conflict of interest created by registered investment advisers being financially incentivized to recommend certain share classes to clients....more

This Week In Securities Litigation

Investment advisers were at the center of a number of actions brought by the Commission this week . Two proceedings involved a registered adviser and its COO that were involved in an unregistered and fraudulent offering; two...more

Barred Securities Professional Charged By SEC

The Commission brought an action against a hedge fund operator who had previously been barred from the securities business and his son. The case centers on undisclosed conflicts and preferential withdrawal rights for the two...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

Recent Amendment of SEC’S “Qualified Client” Definition

The SEC recently adopted an amendment increasing the net worth threshold set forth in the definition of "qualified client" under the Advisers Act. For an investment adviser that is registered with the SEC, or one that is...more

SEC Issues Guidance on Business Continuity Planning for Registered Investment Companies

On June 27, the staff of the Securities and Exchange Commission’s (Commission or SEC) Division of Investment Management (IM) issued a Guidance Update on business continuity planning for registered investment companies...more

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