FINRA is elbowing its way into an oversight role for investment advisers. House Financial Services Committee Chairman Spencer Bachus has introduced the Investment Adviser Oversight Act of 2011. The argument is that the SEC is too overburdened to effectively oversee investment advisors. I find it strange that Congress wants to make the shift. If the [...]
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Presidential Campaign Season and the SEC’s Pay-to-Play Rule
With the recent Iowa Straw Poll, the presidential campaign season is getting into full gear. That also means that campaign fundraising is in full gear. I thought it would be useful to apply the SEC’s new Pay-to-play for Investment Advisors to the crop of presidential contenders. Under SEC Rule 206(4)-5, investment advisors are limited in [...]
What is a Venture Capital Fund?
For me, venture capital has always been a fuzzy term. They generally invest in start-ups and provide early stage capital for their growth. As a company progresses through later rounds of funding, that definition does not seem to work that well. For example, would you label the latest rounds of funding in Facebook as “venture [...]
Report on Investment Adviser’s Use of Social Media in Massachusetts
There is a growing trend in the financial services industry to use social media sites for outreach to existing as well as potential customers. Noticing this trend, the Securities Division of The Office of the Secretary of the Commonwealth surveyed investment advisers registered and doing business within the Commonwealth of Massachusetts. The purpose of the [...]
When is Real Estate a Security?
Fee simple ownership of the “bricks and mortar” of real estate is not a securities transaction. “The offer of real estate as such, without any collateral arrangements with the seller or others, does not involve the offer of a security.” As you move further away from that model, you move closer and closer to the [...]
What is the SEC Looking For With Private Fund Managers
IA Watch published a few recent document request letters in connection with SEC examinations of investment advisers. One is a document request letter sent to a private fund manager (sub. required). These are some of the items requested that caught my attention: Organizational chart showing ownership percentages investment strategy Amount of adviser’s equity interest Amount [...]
Soros Doesn’t Want Your Money
In one of the most visible moves as a result of the new SEC regulations on investment advisers, George Soros is closing his $25 billion Quantum Endowment Fund to outside investors and returning their money. Why? “We have relied until now on other exemptions from registration which allowed outside shareholders whose interests aligned with those [...]
Private Equity Exemption Bill Moves Ahead
The Small Business Capital Access and Job Preservation Act, H.R. 1082, took another step forward this week when it was approved by the House Committee on Financial Services. It still has a long way to go before coming law so this is no time to stop getting your compliance infrastructure in place. The bill still [...]
SEC Made It Harder to Earn Performance Fees
As a general rule, investment adviser cannot charge performance fees. Section 205(a)(1) of the Investment Advisers Act of 1940 generally prohibits an investment adviser from entering into, extending, renewing, or performing any investment advisory contract that provides for compensation to the adviser based on a share of capital gains on, or capital appreciation of, the [...]
Yes, the SEC Wants Real Estate Fund Managers to Register
After six months baking in the oven, the new Form ADV is ready. (To be more precise, the new Part 1 is ready. Part 2 has been sitting on the table for almost a year.) Form ADV still calls for real estate fund managers to register as investment advisers Earlier I had pointed out how [...]
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