The New Change in ERISA’s “Fiduciary” Definition and its Effect on Private Fund Managers

Lauren Mack Compliance, Investment Advisers

Broadened Scope of ERISA Fiduciary Rules After several years of debate and revision, a Department of Labor (DOL) regulation, revising the definition of a “fiduciary” as it applied to investment managers, became applicable on June 9, 2017.  The new regulation expands the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986, as amended, to …

Newly Created “Capital Acquisition Broker” Rule Reduces Regulatory Burdens on Some Broker-Dealers

Lauren Mack Broker Dealer Registration, Compliance, FINRA, SEC

By Greg Caramenico and Lauren Mack On August 18th, the Securities and Exchange Commission (“SEC”) approved a Financial Industry Regulatory Authority Inc. (“FINRA”) rule that establishes less burdensome regulations for “Capital Acquisition Brokers” (“CABs”), which are a subclass of broker-dealers that engage only in limited activities. CABs can elect to be governed by the new rules by converting their current FINRA membership or by submitting a new …

CFTC Approves NFA Cybersecurity Interpretive Notice

Simon Riveles CFTC, Compliance, CPO, CTA, Cyber-security, Futures

By William Kelly Acknowledging the rapid evolution of information technology and correspondent threats, on August 20, 2015 the National Futures Association (“NFA”) issued an Interpretive Notice addressing cybersecurity concerns. The Interpretive Notice established general requirements relating to the information systems security programs (“ISSPs”) of futures commission merchants, commodity trading advisors, commodity pool operators, introducing brokers, retail foreign exchange dealers, swap dealers, and major swap participants …

SEC Issues New Guidance on General Solicitation and Advertising in Regulation D Offerings

Simon Riveles Capital Raising, Compliance, Jobs Act, Reg D Rule 506

By Lauren Mack On August 6, 2015, the SEC’s Division of Corporation Finance (“DCF”) updated its Compliance and Disclosure Interpretations (“CDI”) with eleven new CDI on general solicitation and advertising in Regulation D offerings. That same day, the DCF also issued a no-action letter finding that an online venture capital firm’s procedures for creating online pre-existing substantial relationships did not constitute general solicitation and advertising …

General Solicitation May Trigger State Investment Adviser Registration in Certain States

Simon Riveles Advertising, Compliance, General Solicitation, Investment Adviser Registration, Private Fund Exemption

Background As a consequence of the Jumpstart Our Business Startups Act (“JOBS Act”), beginning September 23, 2013, managers of private funds will be permitted to advertise and solicit the general public in an effort to raise capital for their private fund. While the requirements for investment adviser registration vary from state to state, Florida, Indiana, Louisiana, Michigan, Ohio, Pennsylvania, and Tennessee provide an exemption to …

Private Placements under FINRA Scrutiny

Simon Riveles Broker Dealer Exemption, Broker Dealer Registration, Compliance, FINRA, FINRA Rule 5123, Private Placement, Uncategorized

Peter Tyson and Simon Riveles The Financial Industry Regulatory Authority (“FINRA”) announced in its Annual Regulatory and Examination Priorities Letter from January 11, 2013 that it would prioritize policing private placements in 2013. Of particular concern to FINRA is enhancing its risk-based supervision of the private placement market, and addressing inadequate disclosures and due diligence procedures, which can mislead and/or harm investors. FINRA’s announcement is …

Private Equity Funds Compliance Lapses Lead to SEC Sanctions

Simon Riveles Compliance, Private Equity Fund, SEC

By Ryan Finn and Simon Riveles On March 11th, the SEC announced two decisions involving private equity firms that demonstrate its commitment to emphasizing the important role of compliance in preventing and detecting possible violations of the securities laws.  Although these cases dealt specifically with the activities of private equity firms, the issues raised by the SEC’s decisions were broad enough to be relevant and …