Doug Cornelius on compliance for private equity real estate
President Trump signed an executive order in February that paused all of the Department of Justice investigations under the Foreign Corrupt Practices Act. Perhaps lesser noticed was that the pause was to allow a review of enforcement policies. That review has happened and new guidelines are out. According to the memorandum, the Justice Department will resume investigating FCPA … Read more »
An essential element of an advisory agreement is the fee schedule. The biggest conflict every advisor has is fees. The advisor is literally taken cash from their clients. So, it’s essential that the advisor and the client are very clear about the fee calculation. David A. Nagler and his firm, New Line Capital, LLC, stand … Read more »
At the end of March, FinCEN published an interim final rule that removes the beneficial ownership reporting requirements for U.S. companies and limits it to only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction. Comments are flowing in … Read more »
Cherry-picking and block trading accounts go hand in hand. The most recent firm to be found doing this is North East Asset Management and its principal Greg Zandlo. According to the SEC order, the firm had block trading account at an unaffiliated brokerage firm. This allowed the firm to place purchase and sale orders for … Read more »
Ever wonder what the Securities and Exchange Commission does with Form PF data? The SEC’s Division of Economic and Risk Analysis just published a paper analyzing beneficial ownership concentration and fund outcomes: Beneficial Ownership Concentration and Fund Outcomes for Qualifying Hedge Funds. Specifically, DERA looked at Form PF question 15 that asks what percentage of … Read more »
I’ve now seen the best sales pitch for investors in a Ponzi scheme “Yo Homie! the MCAs are crankin!” delivered to an “investor” on Skype. This message came from Patch Baker. The MCAs are Merchant Cash Advances. That Skype chat is printed in paragraph 111 in the complaint against Mr. Baker and Joel J. Natario … Read more »
The Securities and Exchange Commission obtained final judgments against Safeguard Metals and its principal, Jeffrey Ikahn. The SEC charged Safeguard and Ikahn with acting as unregistered investment advisers by persuading investors to sell their existing securities, transfer the proceeds into self-directed Individual Retirement Accounts, and invest the proceeds into gold and silver coins provided by … Read more »
One legal question that has renewed interest over the past few years is “what is a security?” Crypto lovers will tell you that their stuff is not securities. It all goes back to the definition of “security” and the less conventional term within that definition of “investment contract.” The Howey test focuses on that term … Read more »
When the Securities and Exchange Commission brings charges against a real estate company, it catches my eye. The SEC accused Joshua Schuster and Schuster Enterprises LLC (d/b/a Silverback) of misleading investors and misappropriating some of that invested capital. Of course, this is just the SEC’s side of the case and Mr. Schuster has not had … Read more »
Back in 2019 (before the pandemic) the Securities and Exchange Commission, brought a case against Commonwealth Equity Services, LLC (d/b/a Commonwealth Financial Network), a registered investment adviser and broker-dealer, with failing to disclose material conflicts of interest related to revenue sharing Commonwealth received for certain client investments. The SEC prevailed in federal court, with an … Read more »