6.6.24 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

Private Fund Adviser Rules Vacated

On June 5, 2024, the U.S. Fifth Circuit Court of Appeals vacated the SEC’s final private fund adviser rules adopted August 23, 2023 (as described in our prior client alert, the “Private Fund Rule”). The Fifth Circuit found that the SEC exceeded its statutory authority under Section 211(h) and Section

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6.5.24 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

New QPAM Exemption Requirements

Many SEC-registered investment advisers that provide services to, and transact on behalf of, employer-sponsored retirement plans, individual retirement accounts and certain private funds with retirement investors (collectively, “Plan Clients”) rely on the Department of Labor’s Prohibited Transaction Exemption 84-14, commonly referred to as the “QPAM Exemption.”  The Department of Labor

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5.9.24 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

New Form N-PX Filing Requirement for Managers that File Form 13F

Form N-PX is a form used to report certain proxy votes.  Historically, only mutual funds and other registered investment companies were required to file Form N-PX.  Starting in August 2024, however, all institutional investment managers[1] that file Form 13F, including investment advisers solely to private funds (“Managers”), will also need

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4.22.24 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

SEC Charges Investment Adviser with Recordkeeping Failures Related to “Off Channel” Communications

On April 3, 2024, the U.S. Securities and Exchange Commission (“SEC”) announced charges against Senvest Management LLC (“Senvest”), a registered investment adviser, for longstanding recordkeeping violations and failing to enforce its code of ethics.  Senvest agreed to settle the charges by paying a $6.5 million penalty and taking steps to

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Jahan P. Raissi
4.12.24 / Jahan P. Raissi

“Shadow” Insider Trading – SEC Wins Jury Trial in Closely Watched Insider Trading Case

Last week the SEC notched a win in its first “shadow” insider trading case when a jury returned a verdict for the SEC after only two hours of deliberation. However, back in 2021, the SEC was met with a hail of criticism when it brought this first, and so far

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1.22.24 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

New Monthly Short Position Reporting

On October 13, 2023, the Securities and Exchange Commission (the “SEC”) adopted Rule 13f-2 under the Securities Exchange Act of 1934 (the “1934 Act”), to provide transparency regarding short equity security positions that exceed certain thresholds.  Rule 13f-2 requires “institutional investment managers” that exercise discretionary authority with respect to gross

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1.17.24 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

Annual Letter: 2024

This is our annual letter briefly reviewing various issues that our investment adviser clients should consider over the next few weeks.  We will be pleased to respond to questions, assist you in preparing needed forms and otherwise assist you in satisfying any of the requirements discussed below.  Please contact one

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1.8.24 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

Amendments to Rules Governing Beneficial Ownership Reporting

The Securities Exchange Commission (the “SEC”) adopted amendments to the rules governing beneficial ownership reporting on Schedules 13D and 13G (the “Amendments”) under Section 13 of the Securities Exchange Act of 1934, as amended (the “1934 Act”) that change the timing for investors to file Schedules 13D and 13G.  The

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12.13.23 / Rafi W. Mottahedeh, Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

Tax Court Decision Impacts Self-Employment Tax Exception

Investment fund managers who structure their share of management fee income, as well as their share of performance fees, to qualify for a statutory limited partner exception from self-employment tax (commonly referred to as the “Medicare tax workaround,” which typically uses an investment adviser entity or vehicle formed as a

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12.5.23 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

Corporate Transparency Act Compliance – Update

As discussed in our Client Alert regarding the Corporate Transparency Act, beginning January 1, 2024 (the “Effective Date”), the Financial Crimes Enforcement Network (“FinCEN”) will require business entities to file reports with certain beneficial ownership information unless an exemption applies. As originally written, business entities created or registered to do

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10.19.23 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

Corporate Transparency Act Compliance

The Financial Crimes Enforcement Network (“FinCEN”) previously issued a final rule to implement the Corporate Transparency Act (the “CTA”), which requires business entities to file reports with certain beneficial ownership information (the “Reporting Requirements”), unless an exemption applies.  The CTA broadly applies to most business entities formed in the U.S.

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9.20.23 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

SEC Adopts New Rules for Private Fund Advisers

On August 23, 2023, the Securities Exchange Commission (the “SEC”) adopted significant new rules for private fund advisers (the “Rules”) under the Investment Advisers Act of 1940 (the “Advisers Act”).  Some of the Rules apply to all investment advisers to private funds, including exempt reporting advisers and state-registered advisers (“Investment

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9.13.23 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

SEC Enforcement Actions for Custody Rule Violations

On September 5, 2023, the Securities Exchange Commission (the “SEC”) charged five advisory firms with violations of Rule 206(4)-2 (the “Custody Rule”) under the Investment Advisers Act of 1940 (the “Advisers Act”), which marks the second round of SEC enforcement actions against private fund advisers for those types of violations

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8.23.23 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe, Rachel Sackett

SEC Adopts Amendments to Expand the Scope of Form PF

On May 3, 2023, the Securities Exchange Commission (the “SEC”) approved significant amendments to Form PF (the “Amendments”), the confidential reporting form required for certain SEC-registered investment advisers that provides information about the adviser’s private funds. The Amendments increase the compliance burden of advisers to private equity funds and large

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8.22.23

Join Us at SohnSF – September 26

Shartsis Friese LLP has joined other prominent firms in the San Francisco Bay Area investment funds community to sponsor the 14th annual Sohn San Francisco Investment Conference on September 26th.  One of the partners in our Investment Funds and Advisers group, Jim Frolik, is on the SohnSF board of directors,

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6.5.23 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe

Upcoming July 1, 2023, Compliance Deadline under the California Consumer Privacy Act

Generally, an adviser that does business in California and has a gross annual revenue of over $25 million in the prior calendar year is subject to California privacy rules in the current calendar year.  The California Consumer Privacy Act of 2018, as amended (the “CCPA”) requires any adviser subject to

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5.4.23 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe

Exempt Reporting Advisers and State Registered Advisers – FTC Safeguards Rule – June 9 Compliance Deadline

As noted in our Annual Letter, in 2021 the Federal Trade Commission adopted expanded and detailed rules implementing the requirement under the Gramm-Leach-Bliley Act of 1999 that financial institutions safeguard the consumer information that they collect and maintain (the “Safeguards Rule”). The FTC’s Safeguards Rule applies to all investment advisers

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Jahan P. Raissi
1.23.23 / Jahan P. Raissi

Insider Trading – 2022 In Review

With the start of a new year, it’s a good time to look back at 2022’s developments in insider trading. The SEC’s 2022 Numbers.  The federal government’s fiscal year runs from October 1 to September 30 of the following year, so the SEC’s FY 2022 numbers don’t perfectly align with

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1.12.23 / Jahan P. Raissi, Neil J. Koren, James J. Frolik, Christina Mickelson Hamilton, David Suozzi, Anthony J. Caldwell, Joan L. Grant, Kat Miller, Emma L.G. Wolfe

Annual Letter: 2023

This is our annual letter briefly reviewing various issues that our investment adviser clients should consider over the next few weeks. We will be pleased to respond to questions, assist you in preparing needed forms and otherwise assist you in satisfying any of the requirements discussed below. Please contact one

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Joan Grant
10.3.22 / Joan L. Grant

Recent SEC Enforcement Actions Indicate Strict Regulatory Interpretations

Two recent enforcement “sweeps” by the U.S. Securities and Exchange Commission (“SEC”) serve as a reminder that the SEC at times takes a strict and technical view of regulatory requirements, even when failure to comply has no apparent economic or client impact. First, in early September, the SEC announced that

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