The Securities and Exchange Commission rolled out the accredited investor verification requirement and made it principle-based for purposes of Rule 506(c). You have to take reasonable steps to verify that an investor meets the accredited investor standard. In the same release it created four non-exclusive safe harbors that would deemed to be taking “reasonable steps.” The … Read more »
Compliance and the Tour de France
For me, July starts with the red, white and blue, then quickly turns to yellow. The yellow jersey worn by the overall leader of the Tour de France. I’ve been a big fan of the Tour de France for the past decade and a half. I admit that it was the success of Lance Armstrong … Read more »
Group Purchasing Programs and Compliance
Can a fund manager save the investors money, but still be doing the wrong thing? That’s the issue presented by the Securities and Exchange Commission’s look at group purchasing programs for private equity firms. Buying in bulk usually results in cost savings. A private equity firm, with a collection of companies in its portfolios, should … Read more »
NRS 29th Annual Compliance Conference
I’m trying out a new compliance conference this fall: the NRS 29th Annual Fall Investment Adviser & Broker-Dealer Compliance Conference. I have to admit that I’m attending mostly because they asked me to speak. My session is on Issues on Private Fund Management on Day Two. One of the challenges of staying up-to-date on compliance … Read more »
Life, Liberty and the Pursuit of Happiness
IN CONGRESS, July 4, 1776. The unanimous Declaration of the thirteen united States of America, When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which … Read more »
Guidance on Accredited Investor Verification
The Securities and Exchange Commission revised the private placement rules last year to permit public private-placements. Of course it took some prodding from Congress in the JOBS Act to get that change. The law and the new regulation require the issuer to take “reasonable steps” to determine that the investor is an “accredited investor.” The … Read more »
New Guidance on the Custody Rule for SPVs and Escrows
The Securities and Exchange Commission’s Division of Investment Management recently released updated guidance on the Custody Rule. Private funds, especially private equity funds, have been wrestling with the SEC’s Custody Rule. The rule clearly comes from the perspective of regulating retail investment advisers and hedge funds. It fails to deali n a useful manner with … Read more »
Weekend Reading: Fierce Patriot
General Sherman is known for burning Atlanta. That is as much I knew about him. Having been raised in Boston, my schooling in American History emphasized the Revolutionary War. But my friend and author Megan Kate Nelson has piqued my interest in the Civil War. Why did I read about Sherman? The publisher offered me … Read more »
Compliance Bricks and Mortar for June 27
These are some of the compliance-related stories that recently caught my attention. A Committee of Fund Manager Personnel May Not Be Able to Provide the Requisite Consent on Behalf of the Fund for a Principal Transaction by Steve Ganis in Securities Litigation & Compliance Matters So what constitutes sufficient consent for a principal transaction or … Read more »
Massachusetts Stops Real Estate Scam
Secretary of State William Galvin claims Cabot Investment Properties LLC and its principals, Carlton P. Cabot and Timothy J. Kroll, stole more than $5 million from Massachusetts residents. Cabot was offering tenant-in-common interests to investors. But I remember from law school that a tenant-in-common interest is real estate. So why are the defendants charged with … Read more »