Hedge Fund Blogs From HedgeCo.Net


Category Archives: compliance

July 1, 2014   Dear Friends,   Recently the SEC provided guidance on the application of the Custody Rule to private funds utilizing special purpose vehicles (SPVs) or post-closing escrow accounts. SPV: Generally, as long as an SPV is owned by the investment adviser, the adviser’s related person(s) or pooled investment vehicle(s) controlled by the adviser or the adviser’s related […]

SEC Charges Firm with Pay-To-Play Violation

June 26, 2014 Dear Friends, For the first time, the SEC charged an investment adviser with violating the pay-to-play rules adopted in 2010. The firm paid an almost $300,000 fine due to $4,500 in campaign contributions made to a Philadelphia mayoral candidate and the Governor of Pennsylvania. The firm continued to accept fees from two public pension funds, within two years […]

SEC Charges Hedge Fund With Whistleblower Retaliation

Dear Friends, For the first time the SEC filed a case under its new authority to bring anti-retaliation enforcement actions. The SEC charged a hedge fund with engaging in prohibited principal transactions and retaliating against the whistleblower. The firm agreed to pay $2.2 million and to hire an independent compliance consultant. The CIO conducted transactions between the hedge fund and […]

SEC Chairman Announces Far-Reaching Initiatives

   Dear Friends, SEC Chairman Mary Jo White announced several far-reaching initiatives and rule proposals that would affect virtually every aspect of the stock market. She focused on the impact of computer-driven trading and the importance of updating the SEC’s regulatory regime accordingly. Notably, Chairman White proposed a rule that could require high-frequency traders to register as broker-dealers. Additionally, she […]

CFTC Guidance on CPO Delegation Process

Dear Friends, On May 12, 2014, the CFTC announced a streamlined approach for considering requests for no-action relief with respect to CPOs who delegate certain activities to a registered CPO (e.g. GPs of limited partnerships who delegate CPO authority to a registered investment manager). Each delegating CPO must submit a letter certifying it meets certain criteria outlined in the release. […]

SEC Provides Guidance on Testimonials and Social Media

Dear Friends, On March 31, 2014, the SEC issued Guidance regarding Rule 206(4)-1(a)(1) of the Investment Advisers Act (“the testimonial rule”) and social media. The SEC generally prohibits client testimonials. However in its guidance, the SEC said client testimonials on independent social media sites are permissible, in certain circumstances, with the following important considerations: An investment adviser (“IA”) or investment […]

SEC Charges Men with Insider Trading on Information From Wives

Dear Friends, On March 31, 2014, the SEC announced the following charges against two men that traded on confidential information from their wives: Tyrone Hawk overheard his wife’s work calls indicating that her company, Oracle Corp., was planning to acquire Acme Packet Inc.  Hawk violated a duty of trust when he purchased Acme Packet shares prior to the acquisition and […]

FINRA Bonus Disclosure Rule to SEC

Dear Friends, On March 10, 2014, FINRA filed a proposal with the SEC requiring brokers who receive more than $100,000 in incentive compensation to switch firms, to disclose to clients how much they are paid. Brokers would disclose a compensation range in $500,000 to $1,000,000 bands. The proposed rule was approved by FINRA in September 2013, in an effort to […]

No-Action Letter – Guidance on “Knowledgeable Employees”

  Dear Friends, The SEC has released a No-Action letter providing guidance on individuals who qualify as “knowledgeable employees” under Rule 3c-5 of the Investment Company Act of 1940. The Rule defines knowledgeable employee as any natural person who is an “executive officer, director, trustee, general partner, advisory board member, or person serving in a similar capacity” of a private […]

Hedge Fund Managers: AIFMD To Be Implemented on July 22

The Alternative Investment Fund Managers Directive (the “Directive”) will be implemented on July 22, 2013 and will impact the reporting requirements of alternative investment fund managers (“AIFMs”) covered by the Directive, including hedge funds based in the European Union as well as non-EU managers, including managers based in the United States. New York hedge fund law firm Sadis & Goldberg […]