That story is title does not come from me; it’s a quote from Commissioner Troy A. Paredes of the Securities and Exchange Commission. We cannot simply focus on the costs and benefits of a single rule change on a stand-alone basis. It is the totality of the regulatory infrastructure that impacts the private sector. As [...]
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Finally, Some SEC Action on the July 21 Deadline for Fund Managers
If you’re a private fund manager you have been worried about the looming July 21 deadline for registration. Given the 45 day review period, the filing deadline was June 6. That came and went without the SEC having the rules in place for registration. Sure, the SEC commissioners and staff have been saying the plan [...]
Felons and Fund Managers
Most private funds rely on a Rule 506 exemption under Regulation D to sell their limited partnership interests to investors. A new SEC rule amending Rule 506 should catch the eye of private fund compliance officers. The concept it fairly straight-forward: felons should not be allowed to take advantage of the private offering exemptions. Dodd-Frank [...]
Learning Lessons From Gaffken & Barriger
I read through an occasional SEC complaint looking for lessons to be learned. Those involving real estate funds particularly catch my eye. I found the complaint against Lloyd V. Barriger (.pdf) and his management of his Gaffken & Barriger Fund to be full of lessons. I don’t have any independent facts and am accepting the [...]
The SEC Uses a Shiny New Tool
Earlier this year the Securities and Exchange Commission announced a new initiative encouraging cooperation. They wanted to start using Cooperation Agreements, Deferred Prosecution Agreements, and Non-prosecution Agreements. They finally got use one of their shiny new tools. The SEC announced that Tenaris S.A. entered into a Deferred Prosecution Agreement. The SEC alleged that Tenaris, a [...]
Report on SEC Referrals to Enforcement
For a registered investment adviser, it’s okay to have the SEC’s Office of Compliance Inspections and Examinations visit you. It’s a big problem if the enforcement division visit. OCIE will issue a deficiency letter asking you to fix any deficiencies it finds. If your noncompliance is serious or the examiners think investor funds are at [...]
More on the Proposed Limitations on Compensation for Fund Managers
There is a new joint federal rule in the works for all financial institutions. This will lump together banks, credit unions, broker-dealers and investment advisers. If you have more than $1 billion in assets under management, you need to pay attention to this rule. Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection [...]
The SEC Continues to Investigate Side Pockets and Valuations
The SEC brought another case against a private investment fund for misuse of side pockets. Lawrence R. Goldfarb of Baystar Capital Management agreed to pay a hefty fine to settle claims brought by the Securities and Exchange Commission for misuse of his investment fund’s assets. When used properly, a side pocket is a mechanism that [...]
Incentive Compensation Limitations and Disclosures for Private Fund Managers
At the Wednesday March 2 Open Meeting, the Securities and Exchange Commission voted to approve a new rule that would affect incentive compensation paid to employees of investment advisers and broker-dealers. Commissioners Casey and Paredes voted against proposing the rule as drafted. The other three voted to move the proposed rule into the comment period. [...]
SEC Is Serious About Expert Networks and Gets a New Logo
The Securities and Exchange Commission charged a hedge fund and four hedge fund portfolio managers and analysts with illegally traded on confidential information obtained from technology company employees moonlighting as expert network consultants. Even bigger news is that the SEC came up with this fancy new logo to brand its expert network investigations and prosecutions. [...]
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