In September 2017, the OCIE issued a Risk Alert notifying advisors of the most common deficiencies related to the Advertising Rule. Interestingly, all the deficiencies identified involved misleading performance advertising. The takeaways from the Risk Alert are detailed below. Misleading Performance Results. The Staff observed advisers that presented performance results without deducting advisory fees. The…

Text messaging. We’re all doing it. It’s not only easy to do, but also a highly effective and efficient way to communicate. According to a survey conducted by Smarsh, a firm specializing in cloud-based archiving solutions, text messaging is the most requested channel for business use by employees in financial firms, up over 20 percent…

Beginning on October 1, 2017, investment advisers will be expected to comply with the various new disclosures required on the Form ADV. Earlier this summer, the SEC released additional guidance for investment advisers and compliance professionals in the form of frequently asked questions (“FAQ”) to help answer any remaining questions advisers may have on how…

The DOL Fiduciary Rule (the “Rule”) that will require all advisors to act as fiduciaries with their ERISA clients is rule that was constructed over the course of more than six years by the Obama Administration. Since the Rule was proposed in April 2015, it has been vehemently opposed by many Republicans who believe it…

On February 7, 2017, the Securities and Exchange Commission (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) released a risk alert identifying the five compliance areas most commonly cited in deficiency letters sent to SEC-registered investment advisers (“RIA”). The risk alert focuses on deficiency letters from more than 1,000 RIA audits conducted over the past two years. This…

Despite mounting regulations, pressure on corporate leadership to run a compliant and ethical organization, and headline-making consequences of corporate misconduct, unethical behavior seems to persist within the financial industry. A survey of the US and UK financial services industries conducted by the University of Notre Dame and Labaton Sucharow LLP concluded, “Numerous individuals continue to…

Part 3 of a 3-part Series Operational Due Diligence (“ODD”) has grown in importance significantly for institutional investors looking to invest in funds. Prior to 2008, ODD played an insignificant role compared to investment due diligence (“IDD”) when it came to investors making their final investment decisions. Because of the 2008 financial crisis and the…

On August 25, 2016, the Securities and Exchange Commission (“SEC”) adopted amendments to the Investment Advisers Act of 1940 (the “Advisers Act”) and Form ADV to enhance and improve the reporting requirements for registered investment advisers (“RIAs”). The Amendments become effective on October 1, 2017. According to the Adopting Release, the purpose of the Amendments is…

Does your firm routinely solicit investors and/or co-investors? Does it market its funds to endowments, pension funds and high net worth individuals?  Does your firm advise companies on mergers and acquisitions and debt offerings? If your firm receives compensation for any of these services, then you could be engaging in broker-dealer activities for which registration…

“Full transparency of fees and conflicts of interest is critical in the private equity industry and we will continue taking action against advisers that do not adequately disclose their fees and expenses.”  –Andrew J. Ceresney, Director of the SEC’s Division of Enforcement Over the past several years, the Securities and Exchange Commission (“SEC”) has been…

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