A threshold question in many cryptocurrency inquiries is whether the digital assets qualify as securities under the federal securities laws. If so, then they are subject to a full suite of federal securities regulations....more
3/1/2022
/ Anti-Money Laundering ,
BSA/AML ,
CFTC ,
Cryptocurrency ,
Digital Assets ,
Financial Services Industry ,
Financial Transactions ,
Howey ,
Investment Contract ,
Non-Fungible Tokens (NFTs) ,
Regulatory Oversight ,
Securities and Exchange Commission (SEC) ,
Unregistered Securities
The SEC’s push to regulate the next generation of blockchain-based applications will likely give rise to disputes and enforcement actions, particularly in the developing decentralized finance (DeFi) space....more
The SEC prevailed on a motion to dismiss a closely watched lawsuit alleging that a company employee had engaged in insider trading based on news about a not-yet-public corporate acquisition when he purchased securities of a...more
For much of 2021, the SEC has been in transition. New Enforcement staff have been settling into their roles since April of 2021, when Gary Gensler was confirmed and sworn in as Chair of the SEC. Under former Chairman Jay...more
1/6/2022
/ Cryptocurrency ,
Disruptive Trading Practices ,
Enforcement Actions ,
Fund Managers ,
Hedge Funds ,
Investment Management ,
Private Equity ,
Private Funds ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Special Purpose Acquisition Companies (SPACs)
The Biden administration's climate-change priorities and the Securities and Exchange Commission's increased emphasis on environmental, social, and corporate governance (ESG) have come into focus. The global impact of ESG...more
1/5/2022
/ Business Plans ,
Capital Investments ,
Corporate Governance ,
Corporate Social Responsibility ,
Disclosure Requirements ,
Environmental Social & Governance (ESG) ,
EU ,
Investment Management ,
Regulatory Agenda ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Sustainability
On November 18, 2021, the SEC’s Division of Enforcement announced its Enforcement Results for Fiscal Year 2021, and there are a few key takeaways for fund managers....more
On September 14, 2021, U.S. Securities and Exchange Commission Chair Gary Gensler testified before the Senate Committee on Banking, Housing, and Urban Affairs. During his testimony, he stated that the SEC is exploring...more
With new types of digital assets and related business on the rise, federal authorities have been busy investigating. Recently, the SEC, FinCEN and the CFTC have imposed some notable settlements involving cryptocurrency...more
8/27/2021
/ Bank Secrecy Act ,
BitMEX ,
CFTC ,
Cryptocurrency ,
Decentralized Finance (DeFi) ,
Digital Assets ,
Enforcement Actions ,
FinCEN ,
Popular ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Securities Transactions ,
Securities Violations ,
Trading Platforms ,
Unregistered Securities ,
Virtual Currency
The SEC recently charged a former employee of a biopharmaceutical company with insider trading in advance of an acquisition but with a unique twist: Trading the securities of a company unrelated to the merger. ...more
8/25/2021
/ Acquisition Agreements ,
Enforcement Actions ,
Insider Trading ,
Misappropriation ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Litigation ,
Securities Transactions ,
Securities Violations ,
Stock Options ,
Stock Prices
The U.S. Securities and Exchange Commission (“SEC”) has brought an enforcement action against a special purpose acquisition company (“SPAC”) and its major participants, highlighting enhanced regulatory scrutiny of SPACs and...more
We anticipate a more assertive regulatory enforcement program under the Biden administration, particularly focused on fund managers’ conflicts of interest, advisers’ codes of ethics, and related policies and procedures...more
On March 3, 2021, the SEC’s Division of Examinations[1] announced its examination priorities for 2021. Noting the effects of the global COVID-19 pandemic, the Division of Examinations reported that during the agency’s 2020...more
3/18/2021
/ Broker-Dealer ,
Compliance ,
Environmental Social & Governance (ESG) ,
Investment Adviser ,
OCIE ,
Private Funds ,
Registered Investment Advisors ,
Registered Investment Companies (RICs) ,
Regulation Best Interest ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC)
Late last year, the SEC filed a litigated action in the U.S. District Court for the Southern District of New York against Ripple Labs Inc. and two of its executive officers (collectively, “Ripple”), alleging that Ripple...more
2/23/2021
/ Bitcoin ,
Cryptocurrency ,
Digital Assets ,
Ether ,
Howey ,
Initial Coin Offering (ICOs) ,
Investment Contract ,
Investors ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Token Sales
This yearly report provides a summary of some of the significant changes and developments that occurred in the past year in the hedge fund and private equity spaces, as well as certain recommended practices that investment...more
As President Biden continues to assemble his economic team, reports have emerged that President Biden will nominate Gary Gensler as the next Chair of the SEC. The nomination of Mr. Gensler would clearly signal a more...more
One driver for the first widely adopted cryptocurrency Bitcoin was to create a store of value that existed outside of government control. It is therefore no surprise that attempts to regulate the rapidly developing crypto...more
1/8/2021
/ Bitcoin ,
CFTC ,
Cryptoassets ,
Cryptocurrency ,
Enforcement Actions ,
Financial Conduct Authority (FCA) ,
FinCEN ,
HMRC ,
Initial Coin Offering (ICOs) ,
International Tax Issues ,
Securities and Exchange Commission (SEC) ,
UK
On Monday the SEC announced its enforcement results for FY 2020, accompanied by a report from the Director of its Division of Enforcement. This report confirms what we have seen over the past year for private fund managers:...more
On October 7th, 2020, the Securities and Exchange Commission (SEC) announced the rescheduled date of its 2020 national compliance outreach seminar for investment companies and investment advisers. This program is intended to...more
Asset managers commonly engage regulatory compliance consultants to aid them in addressing regulatory requirements and implementing compliance programs. The work of those compliance professionals can be drawn into SEC...more
10/15/2020
/ Administrative Law Judge (ALJ) ,
Asset Management ,
Compliance ,
Consultants ,
Form ADV ,
Good Faith ,
Investment Advisers Act of 1940 ,
Motions in Limine ,
Scienter ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Securities Violations
We have seen the SEC increase its focus on valuation of privately-held portfolio companies recently. The SEC’s increased focus is in line with our prediction made in the Top Ten Regulatory and Litigation Risks for Private...more
9/1/2020
/ Anti-Fraud Provisions ,
Compliance ,
Enforcement Actions ,
GAAP ,
Internal Controls ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Portfolio Companies ,
Private Equity Funds ,
Privately Held Corporations ,
Securities and Exchange Commission (SEC) ,
Transparency
As investors drive demand for investment products focused on environmental, social and governance (ESG) factors, fund managers have increasingly offered ESG-focused or “sustainable investing” funds. However, a recent speech...more
8/25/2020
/ Asset Management ,
Compliance ,
Corporate Governance ,
Disclosure Requirements ,
Environmental Policies ,
Environmental Social & Governance (ESG) ,
Fund Managers ,
Internal Controls ,
Investment Advisers Act of 1940 ,
OCIE ,
Policies and Procedures ,
Securities and Exchange Commission (SEC) ,
Taxonomy
The SEC issued an order imposing sanctions against private equity adviser Rialto Capital Management, LLC (“Rialto”) for violations of the Advisors Act relating to expense allocation. The settlement addressed Rialto’s...more
8/14/2020
/ Allocation of Funds ,
Enforcement Actions ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
LPAC ,
Policies and Procedures ,
Private Equity ,
Private Equity Funds ,
Registered Investment Advisors ,
Sanctions ,
Securities and Exchange Commission (SEC) ,
Third-Party ,
Transparency
In August 2020, the SEC issued two orders against VALIC Financial Advisors Inc. (VFA) related to VFA’s management of 403(b) and 457(b) plans. These matters arise out of two of the SEC’s enforcement initiatives, the Teachers...more
8/12/2020
/ 403(b) Plans ,
457(b) Plans ,
Asset Management ,
Breach of Duty ,
Broker-Dealer ,
Compliance ,
Conflicts of Interest ,
Enforcement Actions ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Investment Firms ,
Investment Funds ,
Retail Investors ,
Retirement Plan ,
Securities and Exchange Commission (SEC)
With more people working remotely than ever before in light of COVID-19, firms in the private equity and hedge fund space should review their Regulation S-P privacy and information-safeguarding policies to ensure they are...more
6/30/2020
/ Broker-Dealer ,
Consumer Financial Protection Bureau (CFPB) ,
Coronavirus/COVID-19 ,
Cybersecurity ,
Data Privacy ,
Data Protection ,
Data Security ,
OCIE ,
Personally Identifiable Information ,
Policies and Procedures ,
Regulation P ,
Regulation S-P ,
Risk Alert ,
Securities and Exchange Commission (SEC)
In a cautionary tale about the career-limiting risks of SEC sanctions, a private fund adviser and its owner were found to have misused over $1 million of fund assets, resulting in a bar from the investment industry as well as...more