If a fund has frequent transfers by its limited partners, it risks being classified as a publicly traded partnership. That’s a bad result because the fund then becomes taxable as a corporation, subject to a qualifying income test. You might be surprised how low the threshold is for being treated as a publicly traded partnership. … Read more »
Compliance Bricks and Mortar for September 9
These are some of the compliance-related stories that recently caught my attention. Bad news. You’re promoted to compliance officer by Michael Scher in The FCPA Blog It’s not right to lump together all compliance officers. We have to recognize that those working in America are nearly on another planet from COs working in Asia, Africa, … Read more »
Discovering Empty Mansions
If you’ve ever been house hunting, you’ve likely spent some time looking at houses way out of your price range. Bill Dedman did the same thing. He discovered Le Beau Chateau, a $24 million mansion containing almost 15,000 square feet on 52 acres. The property taxes alone were $161,000 per year. But what really caught … Read more »
Picking Cherries
As an investment adviser, you can’t take the best investments for yourself and leave the lesser ones for your clients. That’s exactly what the Securities and Exchange Commission is accusing J.S. Oliver Capital and Ian O. Mausner of doing. The SEC’s Enforcement Division is alleging that J.S. Oliver and Mausner engaged in a cherry-picking scheme … Read more »
Finding the Signal Though the Noise
Nate Silver came into fame for his forecast of the presidential election in 2012. That matched his success in 2008 for also getting the presidential election correct. His book, The Signal and the Noise, is built upon that success. We learn that Silver is not a political pundit, but a numbers geek. He started with … Read more »
The Dog Days of Summer and Compliance
The phrase “dog days” refers to the sultry days of summer, the months of July and August in the Norther Hemisphere. The Romans referred to the dog days as diēs caniculārēs. The Dog Days were the days when the star Sirius rose just before or at the same time as sunrise. They considered Sirius to … Read more »
How Good Is Your Business Continuity Plan?
The Securities and Exchange Commission wants it to be better. In the aftermath of Hurricane Sandy, the Securities and Exchange Commission joined the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority in issuing a joint staff advisory on business continuity and disaster recovery planning. The advisory follows a review by the regulators after … Read more »
Compliance Bricks and Mortar for August 16
These are some of the compliance related stories that recently caught my attention. SEC Charges Two J.P. Morgan Traders With Fraudulently Overvaluing Investments to Conceal Losses The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio’s investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan’s … Read more »
Action Against a Crowdfunding Platform
SoMoLend – which stands for Social Mobile Local Lending – is a crowdfunding platform that allows small businesses to borrow money from a network of lender. The State of Ohio claims that SoMoLend failed to meet the regulatory hurdles currently in place for crowdfunding. It’s also claiming that SoMoLend acting fraudulently when seeking its own … Read more »
Failing to Turn Real Estate Into a Security
Fee simple ownership of the “bricks and mortar” of real estate is not a security. “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 ownership … Read more »