On September 12, 2024, the Commodity Futures Trading Commission (CFTC) finalized the first major changes to CFTC Regulation 4.7 (Rule 4.7) in over 30 years. Among other technical revisions, the amendments to Rule 4.7,...more
Last week, the Securities and Exchange Commission imposed expanded privacy and cybersecurity obligations on fund managers and sponsors registered with the SEC as investment advisers. While many registered investment advisers...more
5/21/2024
/ Breach Notification Rule ,
Customer Information ,
Cybersecurity ,
Fund Managers ,
Incident Response Plans ,
Investment Adviser ,
Notice Requirements ,
Policies and Procedures ,
Privacy Laws ,
Private Funds ,
Recordkeeping Requirements ,
Regulation S-P ,
Securities and Exchange Commission (SEC) ,
Sponsors
In February 2024, the U.S. Department of the Treasury issued its 2024 Investment Adviser Risk Assessment, which explains that there are “several illicit finance threats involving investment advisers,” including that...more
5/17/2024
/ AML/CFT ,
Customer Identification Program (CIP) ,
Exempt Reporting Advisers (ERAs) ,
FinCEN ,
Investment Adviser ,
Notice of Proposed Rulemaking (NOPR) ,
Office of Foreign Assets Control (OFAC) ,
Popular ,
Securities and Exchange Commission (SEC) ,
Suspicious Activity Reports (SARs) ,
U.S. Treasury ,
Venture Capital
On April 12, 2024, the U.S. Securities and Exchange Commission imposed fines and other sanctions on five registered investment advisers (RIAs) for violations of the Investment Adviser Marketing Rule (Rule 206(4)-1), which has...more
A U.S. District Court judge in Alabama recently ruled that the Corporate Transparency Act (“CTA”) is unconstitutional. The CTA, which was enacted on January 1, 2021, directs the U.S. Department of the Treasury’s Financial...more
Key Points - On February 13, 2024, FinCEN issued an NPRM that seeks to include certain investment advisers in the definition of “financial institution” under the BSA. As described in the NPRM as well as in FinCEN’s fact...more
2/16/2024
/ AML/CFT ,
Anti-Money Laundering ,
Bank Secrecy Act ,
Chief Compliance Officers ,
Due Diligence ,
Exempt Reporting Advisers (ERAs) ,
Financial Institutions ,
FinCEN ,
Investment Adviser ,
Investors ,
Notice of Proposed Rulemaking (NOPR) ,
Policies and Procedures ,
Proposed Rules ,
Recordkeeping Requirements ,
Risk Assessment ,
Suspicious Activity Reports (SARs)
Earlier today, the Securities and Exchange Commission in a 3‑2 vote adopted new Rules 3a5‑4 and 3a44‑2 (together, the Dealer Rules) under the Securities Exchange Act of 1934, as amended (the Exchange Act), that will define...more
In the weeks since publishing our original alert, FinCEN released several frequently asked questions (FAQs) on the application of the Corporate Transparency Act (CTA). Private fund managers are likely to find two of these...more
2/1/2024
/ Beneficial Owner ,
Commodity Pool ,
Corporate Transparency Act ,
Exemptions ,
FinCEN ,
Foreign Corporations ,
Fund Managers ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Limited Liability Company (LLC) ,
New York ,
Popular ,
Private Funds ,
Reporting Requirements ,
Subsidiaries ,
Transparency
In the two weeks since the Corporate Transparency Act (CTA) went into effect (see our alert here), the Financial Crimes Enforcement Network (FinCEN) has published several Frequently Asked Questions (FAQs) clarifying the new...more
1/17/2024
/ Beneficial Owner ,
Beneficiaries ,
Corporate Entities ,
Corporate Transparency Act ,
Exemptions ,
FinCEN ,
Grantors ,
Intermediaries ,
Joint Ownership ,
New Guidance ,
Reporting Requirements ,
Smaller Reporting Companies ,
Subsidiaries ,
Tax Exempt Entities ,
Trustees
Starting on January 1, 2024, entities that are organized in the United States or are registered to do business in the United States will generally be required to disclose to the Financial Crimes Enforcement Network (an...more
12/11/2023
/ Beneficial Owner ,
CFTC ,
Commodity Trading Advisors (CTAs) ,
Corporate Transparency Act ,
FinCEN ,
Foreign Entities ,
Fund Managers ,
Investment Management ,
Private Funds ,
Securities and Exchange Commission (SEC) ,
Venture Capital
Key Points -
The Corporate Transparency Act (the “CTA”), implemented primarily through a rule published by FinCEN on September 30, 2022, the Beneficial Ownership Information Reporting Rule (“BOIR Rule”), becomes effective...more
On October 24, 2023, the Director of the Securities and Exchange Commission’s Enforcement Division, Gurbir S. Grewal, gave a keynote address to the New York City Bar Association’s 2023 Compliance Institute.
This address,...more
Key Points -
Last week, the SEC announced settlements with 10 broker-dealers and affiliated investment advisers in connection with their failures to maintain and preserve electronic “off-channel” communications....more
Investment Advisers: Assessing Risks, Scoping Examinations, and Requesting Documents*
I. Introduction -
The SEC-registered investment adviser (“adviser”) population is large and diverse, ranging from global asset managers...more
9/12/2023
/ Audits ,
Brokerage Accounts ,
Business Operations ,
Compliance ,
Cybersecurity ,
Disclosure Requirements ,
Ethics ,
Financial Records ,
Insider Trading ,
Internal Controls ,
Investment Adviser ,
Marketing ,
Policies and Procedures ,
Risk Alert ,
Risk Management ,
Securities ,
Securities and Exchange Commission (SEC) ,
Trading Platforms ,
Valuation
A recent enforcement action against two affiliated wealth management businesses raises concerns over whether and how other registered investment advisers will be subject to sanctions for issues that arise in the ordinary...more
8/31/2023
/ Acquisitions ,
Anti-Fraud Provisions ,
Censures ,
Corrective Actions ,
Enforcement Actions ,
Fund Managers ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Policies and Procedures ,
Private Funds ,
Sanctions ,
Securities and Exchange Commission (SEC) ,
Settlement ,
Wealth Management ,
Wells Fargo
With the announcement of the new Private Funds Rule by the U.S. Securities and Exchange Commission (SEC), a full text of the amendments is linked below. The amendments are highlighted to show the changes from the initial...more
On June 8, 2023, the SEC Division of Examinations staff (EXAMS) published a risk alert focused on the new Marketing Rule (Rule 206(4)-1 under the Investment Advisers Act of 1940). While this new risk alert largely mirrors...more
INTRODUCTION -
Registered investment advisers to private funds clients are required to make filings with the Securities and Exchange Commission (SEC) each year and deliver certain information to their clients. In...more
On Tuesday, February 7, the Division of Examinations of the U.S. Securities and Exchange Commission released its 2023 Examination Priorities. Private fund sponsors and managers should pay attention to the Priorities for two...more
As a general principle, the Marketing Rule requires registered investment advisers to include net performance alongside any presentation of gross performance. Market practice on whether or how this principle applies to case...more
The substantive provisions of the new Marketing Rule come into effect for all private fund managers, fund sponsors and other investment advisers registered with the U.S. Securities and Exchange Commission in one month (i.e.,...more
Key Points -
The SEC’s Division of Examinations published a risk alert that, in the context of a focus on MNPI, highlighted observed deficiencies related to the use of alternative data by private fund managers and other...more
Compliance Reminders for 2022 -
Registered investment advisers to private funds clients are required to make filings with the Securities and Exchange Commission (SEC) each year and deliver certain information to their...more
Any doubts over whether the U.S. Securities and Exchange Commission considers advisory fees to be a focus area for 2022 were dispelled over the past several weeks. In four separate public statements, the SEC and the Staff of...more
Key Points -
The SEC has charged App Annie, Inc. and its former CEO with violations of Section 10(b) of the Exchange Act and Rule 10b-5, which constitute the primary mechanism for enforcing insider trading violations.
This...more