The SEC, in a move that would ease access to capital, on March 4 proposed rule amendments to its exempt offering framework that would, among other things, raise the offering limit under a number of existing regulations, and could streamline the exempt offering process. The proposal will be open for public comment for 60 days, before being considered for adoption.
Advisers now have even less of an excuse for violations of Rule 206(4)-1, the Advertising Rule, than they did before. With the Office of Compliance Inspections and Examinations issuance of a risk alert listing the most frequent Advertising Rule compliance issues identified during examinations, the agency is leaving little doubt as to what may constitute a violation.
Broad investment strategy disclosures that really dont say much may not pass muster with the SEC. Consider the agencys June 3 settlement with a hedge fund manager because its disclosures about overlapping trades and resulting allocations between funds werent as precise as the SEC thought they should be.
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.
The repercussions from the SECs settlement with F-Squared Investments continued last week when an advisory firm that relied on F-Squareds performance data reached a settlement with the agency. That makes two advisory firms - the first one settled this past November - that have found themselves caught up in the wake of the original F-Squared case.
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.
It doesnt matter if the data came from your subadviser - if it raises red flags, you still have to check it out. Virtus Investment Advisers, a Hartford, CT-based adviser, on November 16 agreed to pay $16.5 million as part of a settlement with the SEC over its alleged use of false historical performance data when advertising its funds. The performance data it used came from its subadviser.
Aggressive marketing that touts historical returns on investments is one thing. But when the returns touted are hypothetical, expect the SEC to come calling.
New FAQs from the SECs Division of Corporate Finance provide some helpful clarification for private fund advisers seeking to disseminate information. But some caution is warranted: The interpretations also raise new questions.
Mutual funds, open-end funds and other investment companies that have never been examined should start getting a bit nervous: Examiners may be coming.