Perhaps not getting the same attention as the SECs proposed Advertising Rule (see separate story this issue), but important nonetheless, is the agencys proposed Solicitation Rule, which expands the reach of the Rule beyond cash compensation.
Advisory firms that rely on a no-action letter to support their business practices should make sure that their interpretation of that letter is correct – especially when those business practices are ones the SEC pays particular attention to, like compliance with Rule 206(4)-3, the Solicitor Rule. An advisory firm that relied on such a letter […]
There are two kinds of solicitation that advisory firms might pursue: seeking new advisory clients, and finding new investors for private funds. In terms of compliance, while the two solicitation types share some requirements, they dont share them all - and, in fact, there are some compliance requirements that are unique to each. It is essential that advisory firms design compliance procedures that address the type of solicitation they perform.
The SEC staff has confirmed that advisers that pay solicitors to refer investors to their hedge funds are not subject to the Advisers Act cash solicitation rule, Rule 206(4)-3, provided that the investors are being solicited only to invest in the advisers hedge funds, not to open a private managed account. The guidance was issued […]
OCIE has issued its second-ever ComplianceAlert, a letter addressed to CCOs discussing areas of concern identified in recent SEC adviser and broker-dealer examinations. The letter highlights a number of weaknesses to avoid as well as best practices to adopt. Many of the letters observations will be familiar to experienced compliance professionals. Heres a quick overview:Personal […]
An executive who recommended sub-advisers for his employers new funds of hedge funds has been kicked out of the industry for failing to disclose that his mom received a referral fee from one of the sub-advisers he ultimately recommended. According to the SEC, Michael Donnell was hired by Mercantile Capital Advisors, an affiliate of Mercantile […]
Valuation, Cash Solicitation, and Advertising: Whats Next From the Division of Investment Management
Sure, youve heard about 12b-1 reform and the Form ADV Part 2 re-proposal. But there are plenty of other interesting projects on the Division of Investment Managements plate. At last weeks ALI-ABA investment adviser conference in New York City, Division of Investment Management chief counsel Douglas Scheidt and associate director Robert Plaze provided the industry […]
Some of the more interesting discussions from last weeks NSCP conference: E-mail word searches. At the Q&A session at the end of her keynote address, OCIE director Lori Richards was asked whether the SEC staff expects firms to conduct e-mail word searches. The conference attendee posing the question reported that his firm had run “dirty […]
You may have heard that staff from the SECs Northeast Regional Office, during remarks at a June CCOutreach event, announced that the staff will no longer cite SEC-registered advisers for failing to enforce the application of the cash solicitation rule to individuals or firms that refer investors for their hedge funds. Following that announcement, memos […]
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