Category Archives: Hedge Funds

SEC Risk Alert – Investment Advisers Managing Private Funds

July 14, 2020

On June 23, 2020, the Office of Compliance Inspections and Examinations (“OCIE”)  of the U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert about its assessment of the compliance practices of SEC registered investment advisers that manage private equity funds or hedge funds (“private fund advisers”). In its Risk Alert, the SEC noted that over 36% of SEC registered investment advisers manage private funds, which represent a significant area of investment for pensions, charities, endowments, and others. Click here to read the SEC’s Risk Alert for Private Funds.

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Is Your Pooled Investment Vehicle In Compliance with the SEC’s New Custody Rule for Investment Advisers

March 21, 2010

The recent changes by the U.S. Securities and Exchange Commission (“SEC”) to Rule 206(4)-2 under the Investment Advisers Act of 1940 include an important development for investment advisers that operate so called pooled investment vehicles. Pooled investment vehicle is an SEC term and includes private investments such as limited liability companies and limited partnerships not registered as investment companies. For example, unregistered hedge funds fall under this category.

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SEC Files Enforcement Action Against an RIA for Allegedly Failing to Disclose Compensation Received from Private Investment Funds

June 22, 2009

On May 20, 2009, the U.S. Securities and Exchange Commission (“SEC”) announced that it had filed an emergency civil action charging Wealth Management LLC (registered investment adviser), James Putman (founder, majority owner and Chief Executive Officer of Wealth Management), and Simone Fevola (former President and Chief Investment Officer of Wealth Management) with engaging in a kickback scheme and other fraudulent conduct involving unregistered investment pools for which Wealth Management served as a General Partner or Managing Member and as the registered investment adviser responsible for managing the pooled assets.

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Adoption of Rule 206(4)-8

August 30, 2007

In July, we told you about an SEC open meeting which would include the discussion of a new anti-fraud rule under Section 206 of the Investment Advisers Act of 1940. The new rule was aimed at advisers to pooled investment vehicles such as hedge funds. Earlier this month, the SEC adopted Rule 206(4)-8 which prohibits fraudulent and deceptive practices by investment advisers (whether registered or not) to many types of pooled investment vehicles. In response to the Goldstein v. SEC decision which vacated Rule 203(3)(3)-1 requiring advisers to hedge funds register as investment advisers, the SEC has passed Rule 206(4)-8 to clarify that action can be brought against advisers to pooled investment vehicles regardless of their registration status. This new rule is not intended to add or modify existing requirements or duties of investment advisers currently registered under the Advisers Act.

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Is It Time to Register with the SEC?

January 31, 2006

It’s likely that your investment advisor firm is currently working on its Form ADV annual amendment since it must be filed within ninety (90) days after an advisor’s fiscal year end. You should pay particular attention to updating the firm’s assets under management since regulators have stated an advisor’s assets under management must be current as of the firm’s most recently completed fiscal year.

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