Communiques
The latest compliance news from SEC3 and CCO3.
Weeding out the Bad Actors
August 05, 2013
On the infamous day in July when the SEC loosened the reins on general solicitation and proposed related new rules and rule amendments, the SEC also finalized the "bad actor" disqualification rules for most private placements (as required by the 2010 Dodd-Frank Act).
SEC and European Regulators Establish Supervisory Cooperation Arrangements
July 25, 2013
On July 19th, the SEC announced the establishment of supervisory cooperation arrangements (memoranda of understanding) with European regulators related to the asset management industry. While the SEC initiative deals only with European regulators, it may signal increased interest by the SEC in its asset management registrants outside the United States especially given that some are new to their jurisdiction post Dodd-Frank.
Read more: SEC and European Regulators Establish Supervisory Cooperation Arrangements
The SEC lifts the ban on General Solicitation
July 11, 2013
The Securities and Exchange Commission (“SEC”) voted yesterday to eliminate the ban on general solicitation and advertising for offerings conducted under Rule 506 of Regulation D. Private investment funds can now offer their securities freely and solicit investors with no restriction provided that they:
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take reasonable steps to verify that the investors are accredited investors; and
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all purchasers of their securities fall within one of the categories of persons who are accredited investors under an existing rule (Rule 501 of Regulation D) or the fund reasonably believes that the investors fall within one of the categories at the time of the sale of the securities.
This means that although offers of fund interests will be unrestricted by private funds that will engage in general solicitation, sales of those interests will be restricted to accredited investors only and will be subject to the new verification requirement regarding accreditation.
Latest cease and desist order - Northern Lights and Gemini
May 09, 2013
The Securities and Exchange Commission (“SEC”) issued a cease-and-desist order against Northern Lights Compliance Services, LLC (“Northern Lights”), Gemini Fund Services, LLC (“Gemini”) and the trustees of two investment companies (“Funds”) for which Northern Lights and Gemini were service providers for “disclosure, reporting, recordkeeping and compliance violations”.
Northern Lights, a compliance firm which provided outsourced chief compliance officer services to the Funds, and Gemini, the Funds’ administrator, were each fined $50,000 for failure to perform their respective functions appropriately.
Read more: Latest cease and desist order - Northern Lights and Gemini
First Filing of Form NFA-PQR for CPOs and Form NFA-PR for CTAs
April 29, 2013
Quarterly Form NFA-PQR for registered CPOs
The first Form NFA-PQR for newly-registered CPOs whose registration became effective on January 1, 2013 is due sixty days from calendar-quarter end, i.e. by May 31, 2013 for the quarter ended March 31, 2013. Form NFA-PQR is filed every quarter by all registered CPOs. The NFA Form PRQ is distinct from the CFTC Form CPO-PQR which must be filed on a quarterly or annual basis depending on the assets under management (“AUM”) of the firm.
Read more: First Filing of Form NFA-PQR for CPOs and Form NFA-PR for CTAs
Mutual Funds - New SEC Sweep Exams and More
March 15, 2013
We have heard so much about the SEC's focus on private fund managers, but now attention is turning to include registered funds as well. OCIE Deputy Director Drew Bowden has warned the industry to expect upcoming sweeps. Areas of anticipated focus include 12b-1 fees and alternative investment companies.
Update: Marc Gabelli and Bruce Alpert vs SEC
March 11, 2013
On February 27, 2013, Chief Justice Roberts delivered the opinion of a unanimous U.S. Supreme Court in Gabelli, et al vs. U.S. Securities and Exchange Commission ("SEC"), ruling against the SEC. The Supreme Court, petitioned by Marc Gabelli and Bruce Alpert (the "petitioners"), reversed a decision of the US Court of Appeals for the Second Circuit which had affirmed the SEC's right to bring an enforcement action more than five years after the fraudulent conduct occurred.
SEC Announces 2013 Examination Priorities
February 26, 2013
On February 21, 2013, the SEC announced its 2013 exam priorities. The SEC outlined its market-wide priorities followed by priorities in four distinct examination programs:
- Investment Advisers and Investment Companies
- Broker-Dealers
- Clearing and Transfer Agents
- Market Oversight
In each of the above programs, the SEC will examine (a) ongoing risks (b) new and emerging risks and (c) policy issues.
Filing Dates for Form CPO-PQR and Guidelines for Calculating Assets under Management
February 14, 2013
Many Commodity Pool Operators (CPOs) are currently in the process of preparing to file the new Form CPO-PQR, which is required by the Commodity Futures Trading Commission (CFTC). Form CPO-PQR is filed with the National Futures Association (NFA). The frequency and extent of reporting on Form CPO-PQR depends on the assets under management (AUM) of a CPO.
Read more: Filing Dates for Form CPO-PQR and Guidelines for Calculating Assets under Management
Reminder: CFTC Annual Affirmation of Exemptions
February 05, 2013
All commodity pool operators (“CPOs”) and commodity trading advisers (“CTAs”) that claimed an exemption last year must re-affirm their exemptions within 60 days from calendar year-end. Firms that claimed exemptions from CPO registration under CFTC Rule 4.5 or CTFC Rule 4.13(a)(3) (the “deminimis exemption”), or Rules 4.13(a)(1), 4.13(a)(2), 4.13(a)(5) as well as firms that claimed an exemption from CTA registration pursuant to CFTC Rule 4.14(a)(8) must re-affirm those exemptions by March 1, 2013 or those exemptions will be automatically withdrawn.
The NFA’s guidance can be found here .
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