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…

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…

2016 was a year of increased regulations and record enforcement actions against Investment Advisors/Investment Companies and Broker Dealers. The SEC brought 868 enforcement actions and assessed more than $4 billion in disgorgement and penalties. FINRA assessed $145 million in fines and $41 million in restitution.  Promises of deregulation and a new administration in the White…

With the holiday season upon us, now is a good time to remind your employees of your Gifts and Entertainment (“G&E”) Policy and how to avoid conflicts of interest. Although the SEC has advised investment advisers to set “limitations on acceptance of gifts”, it has offered no formal guidance with respect to specific threshold dollar…

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…

Although business continuity plans (“BCPs”) have been an SEC expectation, on June 28, 2016 the Securities and Exchange Commission (“SEC”) proposed a rule that would require all SEC registered investment advisers to adopt and implement a business continuity and transition plan. The rule would not only require SEC registered investment advisers to adopt and implement…

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’s Office of Compliance Inspections and Examinations has released its Exam Priorities for 2016. Exam priorities and initiatives launched in 2015 will continue to hold the spotlight in 2016 as new risk-based initiatives address systemic issues. Each regulatory topic can be broken down into the following four categories: (1) protecting the individual investor; (2)…

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