October 11, 2019
Failure to disclose compensation is one of those violations almost guaranteed to draw an SEC enforcement action. The agency sees a large part of its mission as protecting investors, so when it suspects that an advisory firm has not been upfront in disclosing what and how it will get paid from clients, expect them to dig deep into that firm until satisfied it unearthed the full story.
September 20, 2019
Mutual fund managers are not the only advisers subject to allegations that they placed clients in more expensive share classes when lower-priced share classes for the same investments were available. An adviser making private fund investments found this out the hard way earlier this month when it settled charges that it failed to disclose conflicts of interest related to its receipt of compensation in return for placing clients in alternative investments.
May 3, 2019
Hedge funds or private equity funds organized and offered by banking entities and affiliated advisers in certain foreign countries may not, under current law, be allowed to share the same name or even a variation of the same name with that bank or adviser. This may cause a problem, because countries like China or Taiwan have local regulations that may require the use of the same name. Some in the industry are asking for relief to deal with this issue.
April 27, 2018
Private equity advisers need to be careful before signing agreements with group purchasing organizations (GPOs). Those agreements may contain conflict-of-interest traps that amount to a breach of fiduciary duty and that should be avoided at all costs.
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.
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.
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.
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.
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.
July 20, 2017
Private equity fund managers may not be as used to SEC oversight as are other advisers. They would be wise, then, to regard a recent agency settlement as a lesson learned: The SEC will scrutinize books and records to make sure fund managers are operating within the limits of their operating documents. Those that are not may find themselves facing an enforcement action.