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I think the IAA Alert regarding adviser burdens that is partially excerpted below (and linked here) is the most interesting read of the month.
The issues regarding past specific recommendations and testimonials being raised in a House Sub-Committee reflect common findings we make in investment adviser compliance reviews. The additional private fund manager issues are additional minutiae about which the SEC has issued rule-making or guidance. It seems some feel those rules are not practically applied.
The IAA supports introduction of the bill, which will relieve advisers of unnecessary burdens without affecting the paramount investor protections provided by the Act. For example, the bill would:
- Eliminate the ban on advisers’ use of testimonials and references to past specific recommendations, to the extent the materials are distributed solely to certain sophisticated clients and high net worth individuals, relying instead on well-established anti-fraud standards governing such materials. The IAA has been advocating for relief on the “past specific recommendation” rule for many years.
- Offer relief from one aspect of the Custody Rule in situations involving privately offered securities where there is little risk of misappropriation by the adviser because such securities are not readily transferrable.
- Ease the recordkeeping burdens for private equity advisers where funds make infrequent and substantial investments that are supported by due diligence typically involving a huge volume of immaterial documents.
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