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The weekly news source for investment management legal and compliance professionals

Topic: Hedge Funds

SEC Focus on Conflicts of Interest Leads to Settlement with Private Fund Adviser

February 3, 2017
Disclosure of conflicts of interest has long been a priority for the SEC in its policing of financial service firms. So when the agency conducted an examination of a public equity fund adviser in 2014 and found what it believed to be potential conflicts of interest that were not disclosed, it mounted an enforcement action that resulted in a settlement.

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Private Fund Adviser Charged with Failure to Disclose Conflicted Transactions

January 13, 2017
The SECís enforcement activities against private fund advisers apparently are not limited to those that registered with the agency. Consider the case of Chicago-based Augustine Capital Management, which, along with two of its three owners, was recently charged by the SEC with a myriad of allegations, including failure to disclose conflicted transactions to investors.

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Hedge Fund Settles SEC Charges That It Failed to Detect Insider Trading

October 28, 2016
Failure to detect insider trading may result in consequences as serious as those for insider trading itself. Just ask this hedge fund manager.

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Private Equity Adviser Feels the Sting of SEC’s Fee, Expense and Disclosure Focus

September 23, 2016
Itís just the latest one, but itís telling: Private equity fund adviser First Reserve Management on September 14 settled SEC claims that it failed to disclose conflicts of interest involving fees and expenses it charged its funds.

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Hedge Fund Manager Gets 15 Months for Obstructing SEC Investigation

September 15, 2016
Donít think it stops with disgorgement and a civil money penalty. Some advisory firm managers may face jail time if the government thinks the offense is serious enough.

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Private Equity Adviser Exams: Fees and Expenses Likely to Dominate the Visit

August 19, 2016
Advisers to private equity funds preparing for a visit from SEC examiners need to keep their eye on the ball: While examiners may inquire into a number of areas, the bulk of the visit is likely to be spent on the fees and expenses charged to funds and portfolio companies.

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Senators Request Private Equity Investor Bulletin

July 22, 2016
SEC chair Mary Jo White found what may have been an unexpected missive in her office mailbox a few days ago: a letter from eight Senate Democrats and independent senator Bernie Sanders requesting that the agency publish an investor bulletin "that consolidates the SECís findings and warnings with respect to private equity investments."

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IAA Wants New Accredited Investor Definition to Include Persons Retaining Advisers

July 15, 2016
Before the SEC adopts a new definition of "accredited investor," the Investment Adviser Association wants that definition to include persons who hire a registered investment adviser to manage their investments on a discretionary basis. But if the Commission does so, it will be going against the wishes of its staff, which recommended against such a move.

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Two Hedge Fund Managers at Same Firm Face Separate Insider Trading Charges

June 17, 2016
Whatís worse than one hedge fund manager charged with insider trading at your firm? Two hedge fund managers charged with insider trading. This might usually be said in humor, but not in this case.

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PE Adviser Settles with SEC for Failing to Register as a Broker-Dealer

June 3, 2016
Is it a harbinger of things to come? A private equity fund adviser and its owner on June 1 paid more than $3.1 million to settle charges from the SEC that they, among other things, charged fees for brokerage services, but failed to register as a broker-dealer with the Commission.

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Proposed Incentive-Based Compensation Rule: Advisers Should Pay Attention

May 19, 2016
The proposed rule issued May 6 by the SEC and five other federal agencies that would prohibit financial institutions from offering incentive-based compensation encouraging inappropriate risk taking should be viewed with concern by at least large investment advisers. While the rule would affect only advisers with more than $1 billion in assets, the way the SEC counts such advisers may mean that some firms that believe they are under the threshold may actually fall within it.

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Ceresney Names Private Equity Enforcement Targets, Counters Defense Arguments

May 19, 2016
When it comes to playing offense in the private equity arena, SEC Division of Enforcement director Andrew Ceresney is not only making clear what the agencyís targets are Ė heís seeking to neutralize the opposition by letting advisers and their attorneys know what defenses wonít work.

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Final Version of SEC Strategic Plan Lists Guidance for Private Fund Advisers

April 29, 2016
The SEC on April 22 issued the final version of its five-year strategic plan. The adopted version of the "Strategic Plan Fiscal Years 2014-2018" looks remarkably like the February 2014 draft version, with one of the few exceptions being the addition of providing guidance to private fund advisers.

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General Solicitation Under Rule 506(c): SEC Investigations Underway

March 4, 2016
When the SEC in July 2013 adopted Rule 506(c), allowing general solicitation of private offerings, there were a number of concerns, including whether the new rule would open the door to fraudulent offerings, as well as whether advisers to private funds would use the rule at all, given the conditions attached to it. Now we have some answers.

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Multiple Disclosure Issues Lead to Enforcement Against Hedge Fund Manager

February 5, 2016
Disclosure is a basic requirement of most SEC regulations. If you want a visit by the SEC, failure to disclose, particularly when it occurs more than once, is one of the best ways to ensure that you get one.

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Bricks and Mortar: Real Estate Investments Provide Unique Challenges

January 22, 2016
Private funds that invest client money in illiquid real estate Ė true bricks and mortar as opposed to real estate securities Ė face unique challenges. Not least among them is scrutiny from the SECís Office of Compliance Inspections and Examinations.

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SEC Considers Changes to Definition of Accredited Investor

January 8, 2016
Just who can invest in hedge funds, private equity funds and other investments seen as risky may change in the near future. The SEC is collecting public comments on staff recommendations that would change the definition of an "accredited investor" in Regulation D of the Securities Act of 1933.

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SEC Accuses Hedge Fund Adviser of False Statements that Led to Fund’s Collapse

December 31, 2015
Honesty is the best policy, and telling the truth to investors is certainly at the heart of much of what the SEC is about. When the agency believes that an adviser fails that standard, expect it to come down hard Ė as one hedge fund adviser found out.

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The Year in Review: Challenges in Asset Management, Cybersecurity, Insider Trading

December 18, 2015
No two years are alike, and a review of 2015ís top developments that affected, or will affect, advisers and funds proves the point. 2015 was a year of challenges: proposed rules affecting asset managers, an intensified focus on cybersecurity that is only likely to intensify more, and an unexpected change to the definition of insider trading.

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Private Funds: Low Systemic Risk, High Operational and Management Risk

October 23, 2015
The SEC has delivered a private fund one-two punch: systemic risks from private funds due to high leverage and too much reliance on derivatives are not as great as some feared, but risks from operational and management issues within advisory firms and the private funds they manage are significant and need to be policed.

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