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What We Learned About The Pay to Play Rules After The Election

CCOs did not sleep well for one. Monitoring employee contributions to political candidates is difficult. The political contributions do not originate from the firm, so there is no accounting control that you can put in place. You can’t ban political contribution if you have an office in California. California labor law seems to make such a […]

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Gun Jumping

I began exploring the difference between advertising the soup and advertising the securities in yesterday’s post. That is, I looking for distinction between a private equity firm advertising in relation to its portfolio companies or real estate holdings, and advertising its performance as an investment adviser. Portfolio company advertising is outside the legal framework under […]

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Crowdfunding

SEC Clears the Way For Intra-State Crowdfunding

Most states have passed crowdfunding laws. One of the barriers has been the breadth of the federal preemption of interstate securities transactions. To be intra-state, and therefore out of the jurisdiction of the Securities and Exchange Commission, the investors and the company doing the fundraising needed to all be in the same state. The problem is […]

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506(c) Enforcement Actions

Although I had a lot of hope that the changing of private placement advertising restrictions by the Securities and Exchange Commission would remove potential foot-faults from the fundraising process, the end result proved challenging. Now it appears that the SEC is on the brink of challenging firms that took at advantage of the loosened restrictions. […]

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Compliance and the Presidential Candidates

With the New Hampshire primary complete, the field of presidential candidates will continue to become smaller. Some of those dropping out may lower their expectations to Vice President or go back to their day jobs. Registered investment advisers have to worry about those day jobs when it comes to campaign donations. Under SEC Rule 206(4)-5, […]

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Another Pay-to-Play Case

There are few among us who think the high cost of getting elected and fundraising that it requires is good for American politics. The SEC took a moral high ground and passed Rule 206(4)-5. That rule effectively prohibits investment managers from making political contributions to politicians who control pension money, other than small token amounts. […]

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SEC Takes a Look at the “accredited investor” definition

The Securities and Exchange Commission left a new Report on the Review of the Definition of “Accredited Investor” as an early Christmas present under your compliance tree. [Feel free to replace Christmas with New Years or the year end celebration of your choice.] We will need to keep an eye on what happens with this […]

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citizen vc

On line portals for fundraising

As part of the updates on private placements, the Securities and Exchange Commission granted a no-action letter to Citizen VC, an online venture capital firm. The main question was whether the firm was creating “substantive, pre-existing relationships” with prospective investors through its website. The firm wanted to avoid a result that its offers & sales […]

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private placement

Updates on Private Placements

One of the troubling aspects of private placements is trying to draw the line between public advertising for the business and public advertising for selling securities. This aspect is even more apparent for private equity funds and real estate funds that want to tout their deals without jeopardizing their fundraising. The Securities and Exchange Commission […]

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Vote

What is a “Voting Equity Security” under the Bad Actor Rule?

When the Securities and Exchange Commission adopted Rule 506(d), it did not define “voting equity securities.” That left many fund managers having to take an aggressive approach on compliance with the “bad actor rule.” The SEC has provided some additional clarity. I have to admit that I did not pay much attention to the recent […]

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