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Topic: Hedge Funds

Hedge Fund Manager Fined Over Inflated Assets Despite Personally Recapitalizing Fund

June 22, 2018
Sometimes personal efforts to make things right donít entirely work. A case in point might be when a managing member of a hedge fund advisory firm personally recapitalizes a fund after it is all but wiped out Ė and is then fined by the SEC anyway.

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Hedge Fund Advisers that Inflate Asset Value Likely to Draw SEC Attention

May 31, 2018
It may sound like a way to bring in investor dollars, but in reality it is more likely to bring in SEC investigators. Hedge fund advisers tempted to lure new investors and keep existing ones by taking questionable steps to increase fund value run the risk of being taken to court by the SEC for fraud.

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Hedge Fund Adviser Execs May Face Personal Fines if They Ignore Red Flags

May 18, 2018
A chief financial officer at a hedge fund advisory firm on May 8 settled SEC charges that he failed to act on red flags involving asset mismarking and insider trading. The firm ended up paying more than $10 million, and the CFO agreed to separately pay a $100,000 fine. The lesson: Advisory firm executives need to be on the lookout for signs of fraud, and act on them when they find them.

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SEC Charges Hedge Fund Manager with Misrepresentation, Freezes Assets

March 2, 2018
Misrepresentation is misrepresentation, but sometime misrepresentation can go so far that a federal court has to step in and put a stop to the alleged activity until the charges are resolved. That is the situation that a purported hedge fund manager found itself in earlier this month.

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SEC Data Show Continued Growth of Private Funds

February 9, 2018
Private funds, whether hedge funds, private equity funds or most other types, continued to grow at a steady rate through the second quarter of 2017.

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PF Manager Settles Charges Involving Conflicts, Disclosure and Exam Findings

January 5, 2018
A private fund manager that the SEC accused of not acting in a timely fashion on multiple examination findings was taken to federal court by the agency, which charged him with, among other things, engaging in conflicted transactions and misleading investors. The manager, Louis Mohlman, Jr. and his two advisory firms reached a settlement with the SEC the same day.

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Hedge Fund Compliance: Insider Trading, Allocation, Alternative Data, and More

January 5, 2018
Advisers managing hedge funds, to a large extent, face many of the same issues that advisers managing other funds do. Requirements regarding fees and expenses, custody, books and records and more must be met. There are other compliance issues, however, where the SEC can be expected to pay particular attention to hedge funds Ė and managing advisers would be wise to make sure they are on top of them.

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Hedge Fund Manager Ordered to Pay $13 Million in Investor Fraud Case

August 25, 2017
Donít promise what you canít deliver, donít overvalue investments and donít take from Peter to pay Paul. Those seem to be the main lessons drawn from a federal courtís judgment against a hedge fund manager that the SEC has litigated against for the past seven years.

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Private Fund Adviser and Owner/CCO Settle Multiple Charges with SEC

August 18, 2017
The SEC is long past the day of being unfamiliar with private fund advisers. It knows what to look for when it investigates and isnít shy about enforcement actions. When it finds a situation where the owner of the advisory firm is also the chief compliance officer, donít be surprised if it makes an example of the case.

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PF Managers of Buyer and Seller Real Estate Funds Must Do Right by Both

August 4, 2017
Private fund advisers specializing in real estate transactions need to beware. Steer clear of conflicts of interest when selling property from one client fund to another. Disclosure must be your watchword and favoritism cannot be shown to either fund, regardless of your firmís percentage of ownership in each.

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Real Estate Investment Strategies in Offering Docs Must be Clear and Followed

July 28, 2017
If your private fundís offering documents state that your fund will invest only in real estate, be aware that those are not just words. Stepping outside the parameters of your fundís stated investment strategy may lead to trouble, both for the fund and for the fund manager. This is also true with unclear and/or inconsistent investment strategy wording between your private placement memorandum and other fund documents. Language, it turns out, matters.

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Form PF FAQs Clarify Just What the SEC Wants

February 17, 2017
Those seeking answers when they complete Form PF now have another source to consult: a new set of answers to frequently asked questions issued recently by the SEC Division of Investment Management.

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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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