Simon Riveles Panelist at the Infovest21 Seminar Entitled “Regulatory Update for Hedge Funds and Funds of Funds”

Simon Riveles Hedge Funds, SEC

  On June 3, 2014, Infovest21, an information provider to hedge fund investors, managers, funds of funds, and service providers, sponsored a seminar at the Cornell Club in New York entitled “Regulatory Update for Hedge Funds and Funds of Funds.” The seminar featured an expert panel comprised of Simon Riveles of Riveles Law Group, Jillian Timmermans of compliance consulting firm, Cordium, and Gene DaCosta of …

SEC Launches New Group Focused on Private Equity & Hedge Funds

Simon Riveles Hedge Funds, Private Equity Fund, SEC

By Simon Riveles and Simon Cooke According to a report by Reuters, the U.S. Securities and Exchange Commission (“SEC”) has formed a group dedicated to examine private equity funds and hedge funds (the “Group”). The Group will focus on how these funds value their assets, disclose their fees and communicate with investors. The Group is co-chaired by Igor Rozenblit and Marc Wyatt. Mr. Rozenblit, both …

ERISA and Hedge Funds

Simon Riveles ERISA, Hedge Funds, IRS, Uncategorized

What is ERISA? ERISA is the Employee Retirement Income Security Act of 1974, which governs, among other things, the investment of certain benefit plans into hedge funds. The significance of ERISA for hedge funds is that if more than 25% of a hedge fund’s equity interests are those of certain “benefit plan investors,” all of the hedge fund’s assets will be considered “plan assets” under …

CFTC and Swaps: What You Should Know

Simon Riveles CFTC, Hedge Funds, Swaps

Under the Commodity Exchange Act (“CEA”), a person who qualifies as a “swap dealer” or “major swap participant” is required to register with the Commodity Futures Trading Commission (“CFTC”) and comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act’s regulatory regime governing swaps, which generally requires, among other things: Mandatory clearing of certain designated derivatives through a “derivatives clearing organization” (“DCO”) Mandatory execution …

The “Bad Actor” Amendments: Private Issuer Compliance with Rule 506

Simon Riveles Bad Actor, General Solicitation, Hedge Funds, Jobs Act, Private Fund Exemption, Private Placement, Reg D Rule 506

By Simon Riveles and Peter Tyson On July 10, 2013, the Securities and Exchange Commission (SEC) adopted amendments to Rule 506 of the Securities Act of 1933 to disqualify securities offerings relying on the Rule 506 exemption that involve certain “felons and other ‘bad actors’”.  The final amendments (the Final Rules) went into effect on September 23, 2013 (the Effective Date) and apply to all …

SEC Proposes Amendments to Rule 156 following repeal of the ban on General Solicitation under Rule 506

Simon Riveles Advertising, False and Misleading Communication, General Solicitation, Hedge Funds, Reg D Rule 506, Rule 156

By Peter Tyson and Simon Riveles Following the SEC’s adoption of amended Rule 506, the SEC has proposed amendments to Rule 156 of the Securities Act of 1933 to extend the rule’s interpretive guidance on sales literature to private funds.  The proposed amendments to Rule 156 reflect the SEC’s concerns regarding fraudulent and misleading sales literature, the incidence of which could increase given the adoption …

FINRA Outlines 2013 Regulatory Priorities

Simon Riveles Cyber-security, FINRA, FINRA Rule 5123, Hedge Funds, Private Placement, Uncategorized

In keeping with its prior year practice, on January 11, 2013, FINRA (the “Agnecy”) issued a Examination Priorities Letter to member firms highlighting the areas of the industry it intends to focus particular attention and resources. These areas include market regulation, business conduct, insider trading, financial and operational concerns. Market Regulation As computer based trading continues to capture an increasingly large segment of the market, …

The JOBS Act: Important Questions Remain Unresolved For Private Funds

Simon Riveles CFTC, General Solicitation, Hedge Funds, Jobs Act

On August 29, 2012, the SEC proposed rules implementing the Jumpstart Our Business Startups Act’s (JOBS) eliminating the long-standing ban on general solicitation and general advertising for certain exempt securities offerings. The proposal would require (1) all purchasers of securities sold in such offerings to be accredited investors and (2) that issuers take reasonable steps to verify that their purchasers are accredited investors. The proposed …

Rhode Island Adopts Private Fund Adviser Exemption to State IA Registration

Simon Riveles Hedge Funds, Private Fund Exemption, Uncategorized

Rhode Island joins a growing list of states that have adopted, or propose to adopt, rules or orders providing a state level private fund adviser exemption to investment adviser registration. These states include California, Colorado, Indiana, Maine, Massachusetts, Michigan, Virginia and Wisconsin. The Rhode Island exemption, effective May 17, 2012, provides managers to private funds, such as hedge and private equity funds, with an exemption …

Publicly Traded Hedge Funds Continue to Disappoint

Simon Riveles Hedge Funds, Publicly Traded Hedge Fund

On Tuesday, the London based Man Group, the world’s largest publicly traded hedge fund, reported Q1 investor redemptions of $1 billion. The money manager, known for its quant-based strategies, has been hemorrhaging assets for several quarters after reporting lackluster results for its flagship fund. The AHL fund was down 6% last year and is down 2% in 2012. Man’s AUM is now less than when …

Proposed FINRA Rule 5123: Enhanced Investor Protection or Unnecessary Regulatory Burden?

Simon Riveles Capital Introduction, FINRA Rule 5123, Hedge Funds, Private Placement, Third Party Marketing

Originally proposed on October 5, 2011, FINRA Rule 5123 (the “Rule”) would, if adopted, significantly increase the regulatory burden on certain issuers, such as private funds, and FINRA members involved in private placement of securities such as third party marketers, placement agents, solicitors and finders involved in private placements and may encourage issuers to rely on the services of unregistered intermediaries to facilitate introductions to …

Absolute Activitist Decision Delineates Extraterritorial Reach of U.S. Securities Law

Simon Riveles Hedge Funds, Off-Shore Fund, Uncategorized

In 2010, the Supreme Court addressed whether the securities laws apply extra-territorially to transactions in foreign securities of foreign issuers by foreign investors. In what are known as the “F-Cubed” cases, the court held that the anti-fraud provisions of the Securities and Exchange Act of 1934 did not apply to the foregoing types of transactions but only to “domestic transactions” which it defined to be …

SEC Provides RIAs with SPVs Additional Regulatory Relief

Simon Riveles Dodd-Frank, Hedge Funds, Investment Adviser Registration, SEC, Uncategorized

In a no-action letter dated January 18, 2012, the SEC (“the Commission”) provided additional guidance and relief from registration to certain registered investment advisers (“RIAs”) with special purpose vehicles (“SPVs”). In a 2o05 no-action letter, the Commission had provided exemptive relief from investment adviser registration to SPVs created by RIAs who act as the general partner or managing member to a private fund that the …

2011 Start-Up Hedge Fund Survey

Simon Riveles Hedge Funds

The law firm of Stewart Kessel LLP recently conducted a survey of its hedge fund clients to determine what the most popular hedge fund strategies, fee and liquidity provisions and fund structures are for start-up managers. According to the study, approximately 50% of the firm’s clients followed an ‘equity or equity related’ strategy, of which a third were focused on U.S. equities, with the remainder …

Virginia Proposes New IA Registration Exemption for Private Fund Advisers

Simon Riveles Dodd-Frank, Hedge Funds, Private Equity Fund, Private Fund Exemption, SEC, Uncategorized

On February 14, 2012, the Virginia Division of Securities and Retail Franchising (the “Securities Division”) proposed the adoption of a new rule exempting certain managers to certain private funds based on the North American Securities Administrators Association (“NASAA”)  model exemption for investment advisers solely to private funds. The new rule would exempt advisers to private funds excluded from the definition of investment company under Section …

NYC Changes Stance on UBT Attributable to Hedge Fund Managers

Simon Riveles Hedge Funds, Uncategorized, Unincorporated Business Tax

Certain New York City based hedge fund management companies have recently been audited with respect to how they account for certain expenses under the City’s Unincorporated Business Tax (“UBT”). Since a statutory amendment to the UBT law was passed over 15 years ago, hedge fund management companies located in NYC have bifurcated the structure of their operations by creating who advisory entities for the fund.  …

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 …

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, …