News & Analysis as of

SEC Brings Charges Against SEC Registered Investment Adviser for Improperly Allocating Expenses and Other Violations of the...

On February 25, 2014 the Securities and Exchange Commission (the “SEC”) filed public administrative and cease-and-desist proceedings against Arizona-based Clean Energy Capital, LLC (a registered investment adviser, “CEC”) and...more

SEC Relief For "M&A Brokers:" Not Required To Register As Broker-Dealers

The Chief Counsel of the SEC’s Division of Trading and Markets recently issued an important no-enforcement letter regarding the status of a person engaged in effecting transactions in connection with the transfer of ownership...more

Mark Your Calendars for Your Annual Review

Before you even start reading this, go to Outlook or whatever calendar you use, pick a date, and put in “Annual Review.” Any time in the year that works for you will do, although I gravitate towards getting housekeeping...more

Strategic Considerations for Start-Up Private Equity Fund Managers

Unprecedented barriers of entry — from the uncertainty of Dodd-Frank reforms to the economic downturn — have presented roadblocks to aspiring private equity fund managers in recent years. ...more

SEC Charges Adviser and Portfolio Manager with Misrepresentations to Money Market Fund Board and Rule 2a-7 Violations

The SEC issued an Order (the “Order”) instituting administrative and cease-and-desist proceedings against Ambassador Capital Management, LLC (the “Adviser”) and the portfolio manager (the “Portfolio Manager”) for a prime...more

SEC Issues Interpretive Guidance on the Venture Capital Fund Adviser Exemption

On December 2, 2013, the SEC's Division of Investment Management issued a new "Guidance Update" that provides some important interpretive guidance on the exemption from registration under the Investment Advisers act of 1940...more

SEC Staff Elaborates on Venture Capital Adviser Exemption

The SEC’s Division of Investment Management provided advisers to venture capital funds with guidance on fund structures that do not jeopardize an adviser’s ability to rely on the exemption from registration provided by...more

Private Fund Adviser Receives Exemptive Relief from Two-Year Compensation Ban under Pay-to-Play Rule Triggered by Contribution to...

An SEC-registered adviser (the “Adviser”) was granted exemptive relief pursuant to Rule 206(4)-5 (the “Rule”) under the Investment Advisers Act of 1940 (the “Advisers Act”) from the Rule’s two-year prohibition on receiving...more

House Passes Bill to Restore Registration Exemption for Private Equity Fund Advisers

The United States House of Representatives passed a bill on December 4, 2013, that would restore an exemption from registration to advisers of certain private equity funds that limit leverage, an attempt to undo another...more

SEC Settles with Adviser Over Discretionary Valuation Practices and Lack of Cross Trade Procedures

The SEC settled public administrative proceedings against a registered investment adviser (the “Adviser”) over (i) its exercise of discretion in valuing securities held by a privately offered fund the Advised managed (the...more

First Pay-To-Play Exemption Becomes Effective For Hedge Fund

Rule 206(4)-5(a)(1) under the Investment Advisers Act prohibits a registered investment adviser from providing investment advisory services for compensation to a government entity within two years after a contribution to an...more

SEC Grants Rare Exemptive Relief from Pay-to-Play “Time-Out” Provision

In what may be a case of first impression, the SEC recently granted exemptive relief from Rule 206(4)-5(a)(1) of the Investment Advisers Act of 1940, the “time-out” provision of the pay-to-play rule. In general, Rule...more

Questions & Answers on State and Local Variations on SEC Pay-to-Play Rule

Many states and municipalities have adopted laws and regulations that affect how investment managers may solicit investment advisory business, including investment in sponsored public and private funds, from the state...more

SEC Targets Investment Adviser Community

The Enforcement Division of the Securities and Exchange Commission (SEC) and its Office of Compliance Inspections and Examinations (OCIE) are focusing their examination and disciplinary efforts on the investment adviser...more

SEC Clarifies Application of Qualified Client Test for Related Advisers

Under SEC Rule 205-3 under the Investment Advisers Act of 1940 (the “Advisers Act”), an SEC registered investment adviser is permitted to enter into an engagement that includes an incentive compensation component, provided...more

SEC Charges Manager Of Private Equity Fund With Violation Of The Custody Rule

The SEC has settled an administrative action with the managing member of a fund of private equity funds. In an examination the SEC staff learned that the manager was violating the custody rule (Rule 206(4)-2 under the...more

SEC Provides Guidance On Definition Of “Qualified Client”

Rule 205-3 issued under the Investment Advisers Act of 1940, or the Advisers Act, provides an exemption from section 205(a)(1) of the Advisers Act, which prohibits an investment adviser from entering into an investment...more

SEC Sanctions Investment Adviser for Pushing Class A Shares When Investors Qualified to Buy Institutional Class Shares

The Securities and Exchange Commission sanctioned an investment adviser and its owner for failing to seek best execution and breaching their fiduciary duty in selecting mutual fund share classes for three advisory...more

SEC Issues National Exam Program Risk Alert Regarding Investment Advisers’ Business Continuity Plans

On August 27, 2013, the Office of Compliance Inspections and Examinations of the Securities and Exchange Commission (the “SEC”) issued a National Exam Program Risk Alert (the “Risk Alert”) resulting from its review of the...more

SEC Issues New Custody Guidance to Private Fund Managers

The Securities and Exchange Commission recently issued an IM Guidance Update (the Interpretative Letter) setting forth new interpretative guidance under the Investment Advisers Act of 1940 (as amended, the Advisers Act) to...more

Non-U.S. broker-dealers and investment advisers may have U.S. registration requirements when existing clients relocate to the...

The SEC recently reminded non-U.S. broker-dealers and advisers with clients that relocate to the United States that they may be required to register under the U.S. securities laws. On July 31, 2013, the SEC sanctioned a...more

SEC Offers Custody Rule Relief to Venture Capital and Private Equity Funds

Following the adoption of the Dodd-Frank Act and amendments to the rules under the Investment Advisers Act of 1940 (the “Advisers Act”) adopted by the SEC, many previously unregistered managers to private funds, including...more

IA Exams and Foxhall Capital Management

Several weeks ago I discussed what I think is the great likelihood that investment advisers are about to be subject to more regular periodic exams in the coming years....more

"Venture Capital Fund" Flowchart for Exemption Under the Investment Advisers Act of 1940

The below flowchart may be helpful to you in answering the question whether you qualify for the exemption for “venture capital funds” under Section 203(l) of the Investment Adviser’s Act of 1940 ( the “Advisers Act”),...more

Defining “Qualified Client” – Uff Da!

Corporations Code Section 25234 generally prohibits an investment adviser registered in California to be compensated on the basis of a share of capital gains. This prohibition is analogous to the prohibition found in Section...more

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