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Category Archives: hedge fund regulation

SEC Director’s Speech on Important Compliance Issues for RIAs

September 12, 2014 Dear Friends, Yesterday, Norm Champ, Director of the SEC’s Division of Investment Management, gave a speech highlighting important compliance, examination, and enforcement topics for registered investment advisers including:  Presence Exam Initiative: The SEC is nearing completion of its goal of examining 25% of newly registered investment advisers.  Alternative Mutual Funds:  Hedge funds must carefully consider the heightened […]

CFTC Issues JOBS Act Relief

September 10, 2014  Dear Friends, The CFTC issued an exemptive letter harmonizing its rules with the SEC’s JOBS Act amendments, lifting the ban on general solicitation for certain CPOs, in connection with private securities offerings.  Previously, the CFTC’s marketing restrictions on private offerings prevented CPOs from engaging in general solicitations. The relief granted by the CFTC is not self-executing – CPOs […]

SEC Announces $300,000 Whistleblower Award

Dear Friends, For the first time, the SEC announced a whistleblower award for an employee that performed an audit and compliance function. The whistleblower was awarded more than $300,000, for reporting wrongdoing to the SEC, after the company failed to take action when the employee first reported it internally. “Individuals who perform internal audit, compliance, and legal functions.. may be […]

SEC Examining Alternative Mutual Funds

August 12, 2014 Dear Friends, The SEC has begun its sweep exams of alternative mutual funds. As we mentioned in a previous alert, the SEC’s sweep will focus on a variety of areas including liquidity, leverage, and board oversight. Please click here for a speech by Norm Champ, Director of the SEC’s Division of Investment Management, outlining the areas of […]

SEC Prosecuting Via ALJ Hearings

August 5, 2014 Dear Friends, As reported by the Wall Street Journal, the SEC is increasingly prosecuting wrongdoers in hearings before administrative law judges, rather than jury trials, where the SEC has recently lost a number of cases. Please click here for the Wall Street Journal article written by Russell Ryan, a former assistant director of enforcement at the SEC. […]

SEC Announces Whistleblower Award

  Dear Friends, Yesterday, the SEC announced an award of over $400,000 for a whistleblower who reported a fraud to the SEC, after the company failed to address the issue internally. According to the SEC, the whistleblower “did everything feasible to correct the issue internally,” and provided the Commission with specific, timely and credible information, allowing for a more rapid […]

SEC Sweep on Alternative Mutual Funds Imminent

Dear Friends, The SEC will begin its sweep exams of alternative mutual funds  “this summer or fall,” said Norm Champ, Director of the SEC’s Division of Investment Management, focusing on the following areas: Liquidity: Ability to satisfy investor redemption requests in a timely manner and compliance with liquidity thresholds – no more than 15% of net assets in illiquid securities […]

SEC Charges Golf Buddies in Insider Trading Ring

July 15, 2014 Dear Friends, The SEC charged a group of golfers with trading on material non-public information (MNPI), resulting in over $500,000 in illegal profits. The golfers must return their ill-gotten gains, with interest, and pay penalties of up to three times their gains. The MNPI source belonged to the same country club as the ringleader, who fed the […]

SEC Provides Guidance on Accredited Investor Verification

Dear Friends, The SEC has issued guidance on accredited investor verification methods for managers engaging in a general solicitation.  Specifically, the SEC narrowed its list of non-exclusive safe harbor verification methods as follows: Income: (a) If tax documents reflecting the purchaser’s income for the two most recent years are not yet available, the issuer could rely on IRS forms for the two most […]

D.C. Circuit Upholds Attorney-Client Privilege

July 7, 2014 Dear Friends, Recently, the U.S. Court of Appeals for the D.C. Circuit held that attorney-client privilege may be upheld in the context of an internal compliance investigation, if “one of the significant purposes” of the communication was to provide legal advice, “even if there were also other purposes for the investigation.” The Court overturned a  lower court […]