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 …
SEC Names Acting Enforcement Director
On January 31, the SEC announced that George Canellos will serve as Acting Director for the Division of Enforcement. Mr. Canellos currently is the Deputy Director of that division, and effective February 8, 2013, will fill the director role vacated by the departing Robert Khuzami. Mr. Canellos was appointed Deputy Director in June 2012 and, according to the release, has been instrumental in developing the …
SEC Settles with Adviser for Failure to Disclose
On September 6, 2012, the Securities and Exchange Commission (“SEC”) issued an Order imposing fines, penalties and disgorgement of more than $1.1 million on Focus Point, an investment adviser, and its affiliates for violations of the Investment Advisers Act and Investment Company Act. The Order indicates that the SEC intends to enforce its investment adviser regulations, particularly where undisclosed conflicts of interest exist between advisers …
SEC Approves New FINRA Member Communication Rules
In April, the SEC approved a significant revamping of FINRA rules regarding member communications with the public (the “New Rules”). The rule changes are a culmination of a multi-year effort by FINRA to update, harmonize and consolidate various NASD rules and interpretations regarding communication and advertising rules. New Communication Categories One of the most significant changes brought about by the New Rules is the consolidation …
SEC Provides RIAs with SPVs Additional Regulatory Relief
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 …
Virginia Proposes New IA Registration Exemption for Private Fund Advisers
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 …
New Small Offering Exemption Proposal Gains Momentum
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
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 …
SEC Clarifies Registration Requirements for Affiliated Advisers
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 …
SEC Provides Guidance for Cyber-Security Disclosure
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]
SEC Takes Enforcement Action Under Aberrational Performance Inquiry Initiative
On December 1, 2011, the SEC announced enforcement actions against three separate advisory firms and six individuals for various misconduct including improper use of fund assets, fraudulent valuations, and
“Volcker Rule” Implementation Proposed
On October 11, 2011, the Federal Reserve’s Board of Governors, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued a proposed rule implementing the
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