While accounting standards, valuation frameworks and industry guidelines have been moving towards standardization of valuation principles, private equity (“PE”) fund managers still have substantial freedom when valuing their portfolio companies. For example, there is inevitable temptations to present interim performance numbers in a particularly favorable light when raising a follow-on fund or limiting write-downs during…

The focus on environmental, social and governance (ESG) as a means of creating sustainable value is on the rise. Institutional investors are increasingly considering nonfinancial performance, such as ESG issues, when making investment decisions. The three factors of ESG and the corresponding investment-related sustainability issues are: Environmental – Is the company environmentally responsible? Does the…

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…

The Commodity Futures Trading Commission (“CFTC”) has recently caused quite a flurry among automated traders with its proposed Regulation Automated Trading (“Regulation AT”). The days of pit trading are long gone. Automated trades involving algorithms now make up a substantial portion of U.S. markets. Trading disruptions, unfortunately, have steadily increased as the use of automated…

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…

March 30 is the deadline for registered investment advisory (“RIA”) firms to file Form ADV annual updating amendments. RIAs should meticulously review their Form ADV Parts 1 and 2 to ensure that all information is accurate, consistent and complete. Executives, including CCOs, who have intentionally or inadvertently misstated or failed to disclose material information on…

The SEC requires registered investment advisers to maintain a compliance program that implements a written code of ethics and policies and procedures to enforce them. Insider trading is a serious regulatory violation that can be avoided, provided clear and concise policy to control and contain the misuse of non-public material information. The COE is also…

The SEC’s Division of Investment Management recently released a Guidance Update which provides important guidance for investment advisors to mutual funds on managing the acceptance of gifts and entertainment from those doing or hoping to do business with the investment adviser. The guidance discusses the inherent conflicts of interest presented by the receipt of gifts…

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