Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

David Y. Dickstein

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OCIE Issues Risk Alert on Compliance Issues Related to Best Execution by Investment Advisers

Posted in Investment Advisers, Investment Companies and Investment Advisers
On July 11, the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission issued a Risk Alert to provide investment advisers and other market participants with information concerning many of the most common deficiencies that OCIE staff has found in recent examinations of investment advisers’ compliance with their best execution obligations… Continue Reading

SEC Releases Updates to Custody Rule Frequently Asked Questions

Posted in Investment Advisers, Investment Companies and Investment Advisers
On June 5, the Securities and Exchange Commission’s Division of Investment Management staff (Staff) updated its “Staff Responses to Questions About the Custody Rule” (Custody Rule FAQs). The Custody Rule FAQs address questions regarding Rule 206(4)-2 of the Investment Advisers Act of 1940, the “Custody Rule.” The update to the Custody Rule FAQs specifically addressed… Continue Reading

SEC Charges 13 Private Fund Advisers for Repeated Form PF Filing Failures

Posted in Investment Advisers, Investment Companies and Investment Advisers
On June 1, the Securities and Exchange Commission announced settlements with 13 registered investment advisers who repeatedly failed to annually file or update reports on Form PF. Form PF is a confidential reporting form required for private fund investment advisers managing $150 million or more of assets. The SEC began requiring that applicable registered investment… Continue Reading

SEC Issues Risk Alert on Observations From Cybersecurity Examinations

Posted in Investment Companies and Investment Advisers
On August 7, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert summarizing observations of its second round of cybersecurity focused examinations (Cybersecurity 2 Initiative) to assess financial services firms’ practices and legal and compliance issues related to cybersecurity preparedness. The Cybersecurity 2 Initiative is built upon OCIE’s… Continue Reading

SEC Staff Issues Information Update for Advisers Filing Certain Form ADV Amendments

Posted in Investment Companies and Investment Advisers
The staff of the Securities and Exchange Commission’s Division of Investment Management (Staff) has issued an Information Update regarding the SEC’s recently adopted amendments to Form ADV, which will go into effect on October 1. After this date, any adviser filing an initial Form ADV or an amendment to an existing Form ADV must provide… Continue Reading

SEC Updates to Form ADV FAQs

Posted in SEC/Corporate
On June 12, the staff of the Securities and Exchange Commission’s Division of Investment Management updated its Frequently Asked Questions on Form ADV and IARD. Much of the additional guidance relates to amendments to Part 1A of Form ADV made by the SEC in 2016. Investment advisers will need to comply with these amendments beginning… Continue Reading

SEC Issues Risk Alert in Response to WannaCry Ransomware Attack

Posted in Broker-Dealer, Investment Advisers, Investment Companies and Investment Advisers
On May 17, the Securities and Exchange Commission Office of Compliance Inspections and Examinations (OCIE), issued a Risk Alert in response to the widespread ransomware attack known as WannaCry, WCry, or Wanna Decryptor that started on May 12. The attack infected computers and servers of various organizations in more than 100 countries. The Risk Alert… Continue Reading

SEC Updates to Form PF FAQs

Posted in SEC/Corporate
On January 18, the Securities and Exchange Commission’s Division of Investment Management updated its Form PF FAQs. Registered investment advisers managing private funds with at least $150 million in private fund assets under management are required to complete and file a Form PF. The new FAQs provide additional guidance on the form regarding both general… Continue Reading

SEC Increases Dollar Amount of the Net Worth Threshold Test for ‘Qualified Clients’ in Rule 205-3 Under the Investment Advisers Act of 1940

Posted in Investment Companies and Investment Advisers, Private Investment Funds
Section 205 under the Investment Advisers Act of 1940 generally prohibits a federally registered investment adviser (RIA) from receiving compensation based on a share of the capital gains on or appreciation of the assets of an advisory client (i.e., performance fees). Rule 205-3 under the Advisers Act provides an exemption from this prohibition for clients… Continue Reading

SEC Enforcement Action Signifies the Need for Investment Advisers to Adopt Written Expense Allocation Policies

Posted in Investment Companies and Investment Advisers, Private Investment Funds
On June 29, the Securities and Exchange Commission charged Kohlberg Kravis Roberts & Co. (KKR) with violations of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940, as amended, and Rule 206(4)-7 thereunder for the misallocation of broken deal expenses. The charge addressed KKR’s failure to disclose in its flagship funds’ offering materials… Continue Reading

SEC Division of Investment Management Issues Guidance Update Relating to Rule 204A-1 of the Investment Advisers Act

Posted in Investment Companies and Investment Advisers
In June, the Securities and Exchange Commission’s Division of Investment Management issued a Guidance Update relating to Rule 204A-1 under the Investment Advisers Act of 1940. Rule 204A-1 provides that a registered investment adviser must establish, maintain and enforce a written code of ethics that requires, among other things, its directors, officers and supervised persons who… Continue Reading

Effective Date of Investment Adviser Pay-to-Play Rule Ban on Third-Party Solicitation

Posted in Investment Companies and Investment Advisers
The Securities and Exchange Commission’s Rule 206(4)-5 (Pay-to-Play Rule) under the Investment Advisers Act of 1940, as amended, prohibits, among other restrictions, an investment adviser subject to the rule, and its covered associates, from providing or agreeing to provide, directly or indirectly, payment to any third party for a solicitation of advisory business from any… Continue Reading

SEC to Examine Never-Before Examined Registered Investment Advisers

Posted in Investment Companies and Investment Advisers
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) announced that it is launching an initiative, as part of its existing National Exam Program, to examine investment advisers who have never-before been examined and who have been registered for three or more years (the Target Firms). The SEC press release on this… Continue Reading