Investment Funds & Advisers Insights

Last October I spoke at a compliance conference on the subject of SEC investment adviser examinations.  The article below is a summary of the presentation, updated with information from yesterday’s release of the SEC’s 2020 Examination Priorities. The Examination Program.  The SEC’s examination of investment advisers – conducted by the

FINRA has updated its Rules 5130 and 5131, which govern allocations of “new issues,” effective January 1, 2020.  Broadly speaking, FINRA has added new categories and broadened the categories of investors that are exempt from the rules’ restrictions (for example, certain sovereign entities and retirement plans), narrowed the types of

Last week the SEC’s Division of Enforcement published its Annual Report for the fiscal year ended September 30, 2019 (available here).  The Report showed that in FY 2019 the Commission brought 526 stand-alone enforcement actions, an increase of over 7% from the 490 cases brought in 2018.  Likewise, a total

Earlier this year, the National Futures Association (NFA) announced that individuals registered as associated persons (APs) of NFA members that engage in swaps activity (for example, commodity pool operators (CPOs), commodity trading advisors (CTAs), futures commission merchants (FCMs) and introducing brokers (IBs)) will need to meet new Swaps Proficiency Requirements.

Shartsis Friese LLP recently commented on the Securities and Exchange Commission’s Concept Release, Harmonization of Securities Offering Exemptions.  The letter is available here. If you have any questions, please contact one of the attorneys in the Investment Funds & Advisers Group at Shartsis Friese LLP: John Broadhurst, Geoffrey Haynes, Carolyn

The Cayman Islands Data Protection Law, 2017 (the “DPL”) was adopted on March 27, 2017.  Similar to the European Union’s General Data Protection Regulation, the DPL regulates how businesses, including investment funds and their advisers and service providers, process personal data and sets forth certain rights and obligations regarding data

The Department of the Treasury recently announced that certain U.S. persons must complete a survey of foreign ownership of U.S. securities as of June 30, 2019.  A U.S. person must file Form SHL if the person (1) manages the safekeeping of U.S. securities (e.g., custodians) if the total market value

The 18th annual Help For Children Gala event for the San Francisco Chapter of Help For Children (aka, Hedge Funds Care) is scheduled for Wednesday, September 18, 2019, at San Francisco City Hall.  This year there will again be a whiskey tasting, in addition to wines from a number of

On June 5, 2019, the Securities and Exchange Commission (“SEC”) released an interpretation to reaffirm and clarify certain aspects of an investment adviser’s fiduciary duty to its clients under the Investment Advisers Act of 1940 (the “Advisers Act”).  The SEC also announced a package of rulemakings and other interpretations addressing

The California Consumer Privacy Act (“CCPA”) is a broad consumer privacy law that is effective as of January 1, 2020, and will apply to most large investment advisers (those with revenue in excess of $25 million).  The CCPA is the most sweeping and comprehensive privacy and data protection law in

The recent publication of the SEC Division of Enforcement’s 2018 Annual Report provided an opportunity to look back over the SEC’s insider trading cases brought from October 2017 (the start of the SEC’s 2018 fiscal year) through the present.  In that 17 month period there were 59 insider trading cases

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 in this letter. Please

Our clients have expressed significant interest in the new “Qualified Opportunity Zone” (“Qualified Zone”) tax incentives created by The Tax Cuts and Jobs Act of 2017 under Subchapter Z of the Internal Revenue Code (“Subchapter Z”). These incentives encourage the formation of “Qualified Opportunity Funds” (“QOFs”) to invest in operating

On April 8, 2016, the Department of Labor (the “DOL”) issued a new regulation that expanded the definition of an “investment advice fiduciary” (the “Fiduciary Rule”). An “investment advice fiduciary” is subject to a heightened fiduciary standard under the Employee Retirement Income Security Act of 1974 (“ERISA”). The Fiduciary Rule

The General Data Protection Regulation (GDPR) is a new data privacy and security initiative adopted by the EU that is intended to provide enhanced protection to EU citizens for their personal data.  The definition of “personal data” is very broad and captures much of the data regarding EU investors that

Given the recent market volatility, we thought we would remind you about NAV decline triggers in your agreements with counterparties.  Most swap, securities lending and margin lending agreements (some of which may be in brokerage account agreements) include covenants that require your firm or its client or fund to notify

This is our annual letter briefly reviewing various issues that our investment adviser clients should consider over the next few weeks. Tax Changes 1. Tax Reform Bill. The Tax Cuts and Reform Bill changes the treatment of the “carried interest” allocable to some investment advisers to investment funds, and will

The President has signed the Tax Cuts and Reform Bill, which among other things changes the treatment of the “carried interest” allocable to most hedge fund managers (typically 20%). It provides that long term capital gain treatment within the manager’s carried interest generally will only be available with respect to

Department of Labor Fiduciary Rule to Take Effect June 9, 2017 The U.S. Department of Labor (“DOL”) regulation that expands the definition of “investment advice fiduciary” (the “Fiduciary Rule”) becomes applicable June 9, 2017, and will affect discretionary investment managers. Immediate Consequences of the Fiduciary Rule By June 9, 2017,

The SEC recently clarified when an investment adviser will be deemed to have custody of client assets in certain separate account situations, through a No-Action Letter and IM Guidance Update. In the recent Investment Advisers Association No-Action Letter, the SEC staff stated that an adviser is deemed to have custody