Investment Funds & Advisers Insights

On January 7, 2014, the California Commissioner of Business Oversight (the “Commissioner“) adopted a new custody rule (the “Rule“)[1] for investment advisers that are licensed as such in California. The Rule will become effective on April 1, 2014. This letter summarizes key aspects of the Rule for California advisers. 1.

This is our annual letter briefly reviewing various issues that our investment adviser clients should consider over the next few weeks. Federally Registered Investment Advisers 1. Annual Updating Amendment to Form ADV.  If your firm is an SEC-registered adviser, it must amend its Form ADV each year on the IARD

California’s Commissioner of Business Oversight recently issued an order (the “Order”), a copy of which is attached, requiring licensees to register a dedicated email address to receive communications from the Department of Business Oversight (the “DBO”) (formerly called the Department of Corporations).  This Order affects a wide range of financial

Earlier this year the CFTC and the SEC adopted identity theft rules and guidelines (the “Regulations”) that require certain CFTC and SEC regulated entities that offer or maintain accounts that are susceptible to identity theft to implement a red-flags program (a “Program”) designed to detect, prevent and mitigate identity theft.

On July 10, 2013, the SEC adopted rules prohibiting the use of Rule 506 of Regulation D (“Rule 506”) for any securities offering involving certain “bad actors” (the “Rule”).  We addressed the Rule in our letter dated August 2, 2013.  This letter reminds advisers that manage private funds of actions

Summary.  On July 10, 2013, the Securities and Exchange Commission (the “SEC”) adopted amendments to Rule 506 of Regulation D (the “New Exemption”)[1]  under the Securities Act of 1933 (the “Securities Act”), as required by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).[2]  The New Exemption will

Next Monday, July 22, 2013, the AIFMD must be implemented in the national laws of each Member State of the European Union (“EU”).  The AIFMD regulates marketing[1] and management of alternative investment funds (“Funds”) by investment managers (“Advisers”) in the EU.  Starting July 22, 2013, through at least July 2015,

The AIFMD is a European Union (“EU”) directive that attempts to harmonize regulations concerning investment managers (“Advisers”) to alternative investment funds (“Funds”)[1]  across the EU.[2]   Generally, the AIFMD regulates the marketing (see section 2.a for definition) and management of Funds in the EU.  The AIFMD directive was adopted on

This is our annual letter briefly reviewing various issues that our investment adviser clients should consider over the next few weeks. Federally Registered Investment Advisers 1. Annual Updating Amendment to Form ADV. If your firm is an SEC-registered adviser, it must amend its Form ADV each year on the IARD

Summary. On November 29, 2012, the Commodity Futures Trading Commission (the “CFTC”) issued a no-action letter giving investment managers of funds-of-funds more time to comply with the trading limits of CFTC Rule 4.13(a)(3), an exemption from commodity pool operator (“CPO”) registration. This relief is important for all managers of hedge

Summary. On August 29, 2012, the Securities and Exchange Commission (the “SEC”) proposed amendments to Rule 506 of Regulation D under the Securities Act of 1933 (the “Securities Act”), as required by the Jumpstart Our Business Startups Act enacted earlier this year (the “JOBS Act”). The proposed amendments would permit

Effective August 27, 2012 (the “Effective Date”), the California Commissioner of Corporations (the “Commissioner”) amended its rule exempting private advisers from certification as investment advisers under California law. New section 260.204.9 of Title 10 of the California Code of Regulations replaces the existing exemption (for certain advisers with fewer than

Summary. On July 18, 2012, the Commodity Futures Trading Commission released final rules and interpretations (the “Final Rules”) defining the term “swap.” The Dodd-Frank Act established a framework for regulating derivatives, granting the CFTC regulatory authority over “swaps,” the SEC regulatory authority over “security-based swaps,” and the agencies joint authority

On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act affects many securities laws. This letter describes its effect only on the marketing restrictions that apply to unregistered securities offerings of private investment funds. An issuer of “securities” (which generally

The SEC recently amended the “qualified client” definition in the Performance Fee Rule, Rule 205-3 under the Investment Advisers Act of 1940 (the “Advisers Act”).[1] The amended Performance Fee Rule (the “Amended Rule”) becomes effective on May 22, 2012. Advisers Act section 205(a)(1) generally prohibits an investment adviser from entering an

The IRS recently issued a ruling permitting partnerships to issue a Schedule K-1 to a partner only electronically if the partnership has received the partner’s affirmative consent. The consent must be obtained in a manner that demonstrates the partner can access the electronic format in which the K-1 is furnished.

Summary. On February 9, 2012, the Commodity Futures Trading Commission (the “CFTC”) issued final regulations (the “Final Rules”) that eliminate the exemption from registration as a commodity pool operator (a “CPO”) in CFTC Rule 4.13(a)(4). The Rule 4.13(a)(4) exemption is available to CPOs of private funds that invest in futures

This is our annual letter briefly reviewing various issues that our investment adviser clients should consider over the next few days or weeks. New Investment Adviser Registration Rules As discussed in our previous letter to clients and friends, the Securities and Exchange Commission (the “SEC”) has adopted new investment adviser

Summary Proposed Exemption On December 15, 2011, the California Commissioner of Corporations (the “Commissioner”) proposed to amend Section 260.204.9 of Title 10 of the California Code of Regulations to provide an exemption from state registration for private fund advisers (the “Proposed Exemption”).[1] Advisers relying on the Proposed Exemption would be

On December 21, 2011, the SEC adopted a rule (the “Final Rule”)[1] amending the “accredited investor” definition in Rule 501(a)(5) of Regulation D under the Securities Act of 1933. The Final Rule will become effective on February 27, 2012. Rule 501(a)(5) provides that a natural person is considered to be