Fund Advertising

What the SEC allows, the SEC staff polices.Expect examiners from the agency’s Office of Compliance Inspections and Examinations to start asking questions about your marketing efforts if your firm publicly advertises its private funds under the new 506(c) Rule. Those questions will likely focus on the accuracy of marketing materials, as well as on the […]

The SEC last week initiated action regarding the former portfolio manager of an Oppenheimer fund, alleging that he intentionally misled investors about the funds valuation and performance. In doing so, the agency, without saying so, reaffirmed the importance of at least part of the 1986 Clover Capital no-action letter, which stated, among other things, that […]

You cant say the money is going to one place when it is actually going to another.That lesson was driven home in two recent SEC settlements involving participants in an alleged scheme that funneled $5.6 million from 74 investors to the parent company of an investment advisory firm and a broker-dealer. You simply cannot provide […]

The SECs proposed expansion of Securities Act Rule 156 to private funds is not limited to funds that choose to advertise through general solicitation – it covers all private funds, including hedge funds and private equity funds, regardless of whether and how they advertise. The upshot: If the proposed amendments to Rule 156 become final, […]

For starters, unless theyre done right, the rules will create an “unlevel” playing field that has the registered fund industry howling.If private funds can advertise for investors without being subject to rules that apply to the mutual fund industry when it advertises, wheres the fairness in that?This is one of several considerations facing the SEC […]

According to OCIE director Lori Richards, the “most important” thing for compliance officers at advisory firms to do right now is to remind their firms employees about their fiduciary obligations to clients. Beyond that, she suggested a number of specific areas that compliance officers should “pay particular attention to.” SEC examiners, she noted, will be […]

The NASD has issued a Notice to Members providing guidance on the new “text box” amendments to the NASD rule governing communications with the public. The rule requires performance sales material for mutual funds (other than money market funds) to present Rule 482 and Rule 34b-1 performance information. The funds maximum front-end or back-end sales […]

At the recent SEC Speaks conference, OCIE associate director Gene Gohlke listed top deficiencies found in adviser and fund examinations. The findings, he said, were “pretty consistent” with what OCIE has found in past years:Top Adviser Deficiencies: 1. Books and records/disclosures. According to Gohlke, the SEC exam staff frequently found inaccuracies and omissions in Form […]

The ICI has asked the NASD not to require pre-use filing of all television, radio, and video advertisements, noting that the regulatory approval process would unduly delay production of the ads. “Filing storyboards for review would not solve the problem,” said the group in a May 20 comment letter on the NASDs proposed rulemaking. “Talent and […]

Last week Senator Daniel Akaka (D-HI) introduced a mutual fund reform bill that would, among other things, require SROs to adopt rules imposing a fiduciary duty on broker-dealers that provide individualized investment advice. The bill, S. 1037, the Mutual Fund Transparency Act of 2005, is a revised version of the bill Akaka introduced in the […]