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The weekly news source for investment management legal and compliance professionals

Money Market Fund FAQs Raise More Questions

Sometimes attempts to bring clarity raise more questions. So it may be with the SEC staff’s recent issuance of a large set of answers to frequently asked questions about its July 2014 money market fund amendments and a smaller set of FAQs involving related valuation issues.
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Valuation: What Examiners Want to Know

Examiners follow the money. Valuation is where the money starts. Private funds in particular need to be concerned about examiner inquiries into valuation. Hedge fund managers have part of their compensation tied to the value of their portfolio. Private equity fund managers may want the NAV of their funds to be as high as possible when raising additional capital.
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Advisory Agreement Case: SEC Files New Charges After $55M Court Win

Watch out for those old active advisory contracts. They can come back and bite you. The SEC on April 28 instituted administrative proceedings against adviser Charles Kokesh. The Commission action followed a March 30 final judgment by the U.S. District Court for the District of New Mexico, in which Kokesh was ordered to pay more than $55 million in disgorgement, interest and civil money penalties.
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MJW Testifies: Why the SEC Needs More Money

SEC chair Mary Jo White testified before a House subcommittee on April 15, making the case for additional funds in its FY 2016 budget to bring on board, among others, 225 new examiners, 93 new Division of Enforcement employees, six new economic and risk analysis staff, and 12 new Division of Investment Management positions.
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Custody Exam/Audit May Not Be Required When Adviser and Client Are the Same

It may seem a bit odd for advisory firms to arrange surprise independent verification exams of funds in principal accounts. Now they may no longer have to. The SEC staff, in a March 23 no-action letter, told an advisory firm that it would not recommend enforcement action against it for violating Rule 206(4)-2, the Custody Rule, if the firm does not comply with the Rule’s independent verification and account statement delivery provisions.
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