Posts By: Eugenie Warner

The SEC Amends the Definition of “Accredited Investor” and the Debate Over Private Market Protections Continues

On August 26, 2020, the Securities and Exchange Commission amended Rule 501(a) of the Securities Act of 1933, expanding the definition of “accredited investor,” which is one of the principal tests for determining who is eligible to participate in private capital markets in the United States.[1] The SEC additionally amended Rules 144A, 215, and 163B … Continued

A Familiar Theme in Unfamiliar Times

Recently, the SEC settled with a private equity adviser for failing to adequately disclose and obtain consent for conflicts of interest associated with portfolio compensation. The Administrative Order reminds us of familiar tenets to regulatory disclosure, and perhaps this familiarity is reassuring to us in these unfamiliar, pandemic times. However familiar the theme, this case … Continued

COVID-19 and Compliance – Mitigation Efforts Will Have Compliance Consequences the SEC Soon Will Examine

We understand that COVID-19 has brought many stresses, both personal and professional.  To many private fund advisers, this may seem an appropriate time to allow “compliance” to take a “back-seat.”  However, many business and management decisions your firm now may be contemplating or is already positioned to take likely will have compliance ramifications, now or … Continued

Pandemic Puts Business Continuity Planning to the Test; Regulators Take Notice

The rapid expansion of the novel coronavirus and the COVID-19 pandemic has caused extreme stress if not panic throughout the financial markets, with ripple effects to many if not all financial advisory firms.  Solid Business Continuity Plans (“BCPs”) can help financial advisers stabilize their operations and cope with this dramatic change of circumstances. Here are … Continued

Tips From the Field to Enhance Your Compliance and Supervisory Programs

At the recent CSS Fall 2019 Conference, experienced professionals Jeff Blumberg of Faegre Baker Daniels and John Gentile of CSS provided practical solutions for in-house compliance pros. Regulators, in-house compliance personnel, and outside compliance and legal counsel understand all too well that compliance should not be a separate department from the rest of the advisory … Continued

Tips for Developing a Tailored Private Fund Compliance Calendar

As regulatory concerns proliferate and become more complex, developing and monitoring your “to-do” list becomes of paramount importance.  John Gentile, the Director of Private Fund Manager Services for Compliance Solutions Strategies and Michael Emanuel, a Partner at Stroock & Stroock & Lavan LLP provided attendees of the recent CSS 2019 Fall Conference some insight into … Continued

SEC Risk Alert Puts Spotlight on Principal Trading, Agency Cross Trades

On September 4, 2019, the U.S. Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) issued another risk alert, this time on “Investment Adviser Principal and Agency Cross Trading Compliance Issues.” While not wildly informative, the Risk Alert summarizes several issues identified during examinations of the last three years and reminds us of … Continued

How an LPA’s Definition of Organizational Expenses Can Connect to a Custody Rule Violation

For private fund advisers, fee and expense reviews are a cornerstone to a sound compliance program. The SEC repeatedly reinforces this axiom, and a recent SEC Settlement Order highlights how the lack of such reviews and the misclassification of expenses can lead to a Custody Rule violation. In this case, according to the Settlement Order, … Continued

Custody Concerns Continue

You timely filed your Form ADV within 90 days of fiscal year end, but, did you properly answer all the questions related to custody? Not surprisingly, the Form remains confusing for many advisers, as does application of the Custody Rule itself. The SEC has issued guidance, letters to the industry, alerts and FAQs, but things … Continued

How Do You Supervise for SEC Pay-to-Play Violations?

If you wanted more information about the contours of the SEC’s Pay-to-Play Rule, or how the SEC may enforce it, three recent Settlement Orders against large investment advisers for “over de minimis” political contributions provide some insight regarding one of the prohibitions: Contributions by Covered Associates to certain Government Officials over the specified Exception amount (capitalized words are terms in the … Continued

Do Your Fund Documents Clearly Disclose Receipt of Accelerated Monitoring Fees?

Somewhat more reminiscent of the broken-windows enforcement era, two affiliated private equity advisers managing billions settled with the SEC on charges that they failed to make pre-commitment disclosures in fund governing documents related to accelerated fees received from portfolio companies. Interestingly, according to the Settlement Order, the advisers had made some disclosures in fund documents … Continued

Deputy Attorney General Rod Rosenstein Discusses Compliance Program Effectiveness

The embattled U.S. Deputy Attorney General Rod Rosenstein recently spoke to compliance pros at the 2018 Annual Conference for Compliance and Risk Professionals. Bulleted below are some of the statements from his keynote speech, which evidence the view from near the top of the Department of Justice: As to what it means to have a culture … Continued


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