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 that meet the definition of “Qualified Client” found in the rule.
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

On April 13, the Securities and Exchange Commission voted to adopt final rules (the “Final Rules”) implementing business conduct standards and chief compliance officer requirements for security-based swap dealers and major security-based swap participants (collectively, “Swap Entities”). Authority for the SEC to adopt the Final Rules is grounded in Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Final Rules are the SEC equivalent for security-based swaps of the business conduct rules for swaps adopted by the Commodity Futures Trading Commission in 2012.
Continue Reading SEC Adopts Business Conduct Rules and Chief Compliance Officer Requirements for Swap Dealers and Major Security-Based Swap Participants

On March 4, the Federal Reserve Board (FRB) announced a re-proposal of rules that set single-counterparty credit limits for domestic and foreign bank holding companies with total consolidated assets of $50 billion or more. Prior versions of the rules, which will implement Section 165(e) of the Dodd-Frank Act, were proposed in 2011 and 2012.
Continue Reading Federal Reserve Board Proposes Enhanced Single-Counterparty Credit Limits for Large Banks