CFTC Rescinds and Modifies Certain Exemptions to Registration for CTOs and CTAs

Simon Riveles CFTC, CPO, CTA, Private Fund Exemption

On February 9, 2012, the CFTC adopted final rules regarding changes to Part 4 of the Commission’s regulations regarding registration and compliance obligations for CPOs and CTAs. The new rules: rescind registration exemptions available for commodity pool operators (“CPOs”) offering commodity pools to sophisticated and creditworthy investors under CFTC regulation 4.13(a)(4); rescind relief from the certification requirement for annual reports providing certain pools offered only …

New Small Offering Exemption Proposal Gains Momentum

Simon Riveles General Solicitation, SEC, Uncategorized

Spurred on by calls from the President to jump start small business, Congress has, in the past several months, taken up a various pieces of legislation aimed at facilitating small company financing. One such piece of legislation is H.R. 1070 which, if enacted, would allow small companies to raise up to $50 million in a twelve month period without undergoing the burdensome process of an …

SEC Brings Naked Short Selling Action Against Brothers

Simon Riveles SEC

January 31, 2012, the SEC charged against two brothers for engaging in naked short selling in violation of Rule 203(b)(1) and (3) of Regulation SHO. While short selling is legal, sellers must locate shares to borrow before selling them short and must deliver borrowed shares before a specified date. Jeff Wolfson, and his brother Robert, allegedly generated $17 million in ill gotten gains from naked …

Massachusettes Adopts New Private Fund Adviser Registration Rules

Simon Riveles Investment Adviser Registration, Private Fund Exemption

On January 12, 2012, the Massachusetts Securities Division adopted new rules for the registration of investment advisers solely to 3(c)(7), venture capital or 3(c)(1) funds, where all investors in the 3(c)(1) fund are “qualified clients”. The rules replace the existing exemption which allowed advisers to “institutional buyers” including private funds, such as hedge funds, in which each investor is accredited and has invested at least …

Your Investment Adviser on Facebook: SEC Issues Release on Advisers and Social Media

Simon Riveles Uncategorized

On January 4, 2012 the SEC’s Office of Compliance Inspections and Examinations released an Alert regarding the use of social media by registered investment advisers and the policies and procedures they have in place in connection with social media (such as Facebook, Twitter and blogs). In reviewing compliance programs the SEC encouraged advisers to consider the following factors in respect to the standards for investment …

SEC Clarifies Registration Requirements for Affiliated Advisers

Simon Riveles Hedge Funds, SEC, Uncategorized

On January 18, 2012, the SEC issued ‘no action’ guidance permitting investment advisers to private funds to include certain affiliated advisers in their Form ADV registration. When a manager advises one or more private funds or certain managed accounts through a structure involving multiple entities such structure will be regarded as a “single advisory business” if such affiliated entities are: subject to a uniform compliance …

Easing the Ban on General Solicitation

Simon Riveles General Solicitation

As Congress grapples with ways to kick start the economy and spur small business growth and hiring, one proposal gaining momentum is to relax or even eliminate the long-standing ban on general advertising or solicitation imposed on private companies seeking to raise capital under the private placement rules of Reg D of Section 4(2) of the 1933 Securities Act.

Finders Exception to Broker-Dealer Registration in the Capital Introduction Space

Simon Riveles Capital Introduction, Finder's Exception, Private Placement, Third Party Marketing

As competition for capital has steadily increased for private companies and private funds, issuers and managers have turned to the services of third party marketers (“TPMs”) to raise capital or sell their funds to prospective investors. In the hedge fund space, TPMs typically demand an exclusive arrangement with the fund and approximately 20% of all fees. But due to the nature of their services and …

SEC Provides Guidance for Cyber-Security Disclosure

Simon Riveles Cyber-security, SEC

As digital technology and operating online has become ever more important for American companies, the risk associated with deliberate cyber-attacks and unintentional cyber-incidents has caught the attention of regulators. On October, 13, 2011, the Securities and Exchange Commission provided guidance to public companies concerning their duty to disclose these risks under the securities laws.[1]

Structural Difficulties Posed by Hedge Funds Investing In Illiquid Securities

Simon Riveles Hedge Funds, Illiquid Securities, Private Equity Fund, Side Pockets

As the number of hedge funds pursuing similar strategies has grown, managers have increasing looked to private equity and other illiquid assets to generate alpha. However, the traditional hedge fund structure is meant to facilitate investing in liquid securities that are readily marked-to-market. Housing illiquid assets under the traditional hedge fund model can result in a variety of potential problems in the area of taxation, …