In a recent development with far-reaching implications, the U.S. Securities and Exchange Commission (SEC) is implementing a crackdown on broker-dealers and investment advisors who use predictive data analytics. This intervention appears to be driven by concern over potential conflicts of interest arising from this particular application of artificial intelligence. According to a report by Faegre…
On August 23, 2023, the U.S. Securities and Exchange Commission (the “SEC”) adopted new rules and amendments under the Investment Advisers Act of 1940 (the ‘Advisers Act’) to fortify the regulation of private fund advisers, thereby padding the compliance burden for said advisers. Tannenbaum Helpern Syracuse & Hirschtritt LLP reported that this action was undertaken…
On August 23, 2023, the Securities and Exchange Commission (“SEC”) made a noteworthy decision by voting three to two, on adopting a new set of final rules. These rules, referred to as the “Private Fund Rules,” pertain to Private Fund Advisers and Documentation of Registered Investment Adviser Compliance. Private funds are usually advised by investment…
On August 28, 2023, the United States Securities and Exchange Commission (SEC) reached a settlement with Impact Theory, LLC, in a landmark enforcement action examining an offering of non-fungible tokens (NFTs). The SEC claimed that the NFTs were promoted as investments and deemed this an unregistered securities offering – a breach according to Federal securities…
On August 23, 2023, the U.S. Securities and Exchange Commission (SEC) announced new and amended guidelines, under the Investment Advisers Act of 1940. Dubbed the Private Funds Rules, it establishes a series of regulations designed to address conflicts of interest and practices by advisers that pose significant risks to investors and private funds. The full…
On August 25, 2023, the U.S. Securities and Exchange Commission’s Division of Corporation Finance (Corp Fin) issued five new Compliance and Disclosure Interpretations (CDIs) related to Rule 10b5-1 trading plans. This information was made public through a recent article published on JD Supra by Wilson Sonsini Goodrich & Rosati. Of the five newly issued CDIs,…
On August 23, 2023, the U.S. Securities and Exchange Commission (SEC) approved substantial changes to the Investment Advisers Act of 1940 (the Advisers Act). The decision, passed by a vote of three-to-two, will notably impact private fund advisers across the globe. The SEC firmly stated that these new rules, known collectively as the New Rules,…
The U.S. Securities and Exchange Commission (SEC) has recently filed its opening brief in a significant case at the U.S. Supreme Court. They have urged the Supreme Court to reverse a previous ruling by a lower court which, the SEC suggests, could inhibit their power to protect investors from potentially harmful conduct. This case potentially…
The U.S. Securities and Exchange Commission (SEC) recently embraced a new set of rules and amendments that will have a significant effect on the management and administration of private funds by both registered and unregistered investment advisers. These changes, referred to by insiders as the “Adopted Rules,” apply to the Investment Advisers Act of 1940…
On August 23, 2023, the U.S. Securities and Exchange Commission (SEC) took a new stance on private fund advising by implementing revised regulations and amendments under the Investment Advisers Act of 1940. This decision follows the original proposal submitted in February 2022 with considerable modifications. Despite the softening from the initial version, the enacted regulations…
In a significant ruling, the Second Circuit, on August 24, 2023, warded off potential upheaval in the commercial lending market. The court pronounced its judgement in Kirschner v. JP Morgan Chase Bank, N.A. (JPM), et al. casting syndicated secured term loan notes as not securities for state-law purposes. The ruling adhered to the Supreme Court’s…
In recent developments, the Securities and Exchange Commission (SEC) has finalized a ruling that will significantly impact the operations of private fund advisers. While the rule has been softened from the initial proposals, it still represents crucial reforms in the business of private fund advisers. This information has been analyzed in detail by the Investment…
On July 26, 2023, the Securities and Exchange Commission (“SEC”) laid out a final rule that obliges registrants to furnish enriched and standardized reports concerning “cybersecurity risk management, strategy, governance and incidents”. This is a result of discussions that took place following the proposed rule on March 9, 2022. The new regulation is applicable to…
In a significant regulatory adjustment, the Securities and Exchange Commission (SEC) has made substantive changes to the Private Fund Adviser Regulatory Regime. These amendments, rolled out on August 23, 2023, were pushed through by a vote of 3-2 and include the institution of five new rules under the Investment Advisers Act of 1940 (the “Advisers…
After a period of lengthy and intense deliberations, the U.S. Securities and Exchange Commission (SEC) has adopted multiple rules with significant implications for private funds. These new regulations will affect not only the private funds themselves but also their governing documents and side letters. As reported by JDSupra, these changes have been in the pipeline…
In what could be viewed as a punishing season, the Financial Industry Regulatory Authority (FINRA) seems eager to move beyond the heat of the summer. A series of decisions have conspired to present challenges for the regulatory body, reminiscent of the New York Yankees’ uneasy summer spell. The first substantial blow came in early July…
The U.S. Securities and Exchange Commission’s (SEC) Division of Examinations recently issued a risk alert on July 31, 2023, highlighting observations from its compliance examinations of registered broker-dealers. The Division raised serious concerns about the deficiencies observed in certain anti-money laundering (AML) compliance programs. According to the SEC, registered broker-dealers are bound by law to…
On August 23, 2023, the Securities and Exchange Commission (SEC) adopted a final rule package that signifies notable changes made to the regulation of private fund advisers in the U.S. These rule modifications, labeled as ‘Rules’, directly affect the management and regulatory framework under the US Investment Advisers Act of 1940, as reported by Latham…
In a development which has been apprehensively anticipated, new rules and amendments were adopted by the U.S. Securities and Exchange Commission (SEC) on August 23, 2023 under the Investment Advisers Act of 1940. Referred to as the Private Fund Adviser Rules or simply, the Rules, these changes are expected to have a significant impact on…
In a recent, highly anticipated decision, the United States Court of Appeals for the Second Circuit confirmed an earlier District Court’s ruling in Kirschner v. JP Morgan Chase Bank. According to the ruling, the syndicated loan disputed in the case is not a security and is, therefore, not subjugated to state and federal securities laws….
On August 25, 2023, the U.S. Securities and Exchange Commission (SEC) announced a substantial adjustment to the fees that public companies and other issuers will be required to pay when registering their securities. The present rate of $110.20 per million dollars is to be increased to $147.60 per million dollars, marking a significant change in…
In a significant shift that is bound to impact private fund advisers and investors, the U.S. Securities and Exchange Commission (SEC) has adopted new rules during an open meeting on Wednesday, August 23, 2023. According to the explicit information, the Commission voted 3-2 along party lines to implement these changes, which are set to leverage…
On July 26, 2023, the U.S. Securities and Exchange Commission (SEC) issued proposed rules under the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. These proposals target conflicts of interest linked to the use of predictive data analytics (PDA) and similar technologies like artificial intelligence (AI) by broker-dealers and investment advisors…
Counsel for public corporations may need to reassess their litigation disclosures following a recent federal district court opinion. The ruling indicated that a company’s use of the phrase “without merit” to describe ongoing litigation in its public filings could potentially lead to federal securities fraud claims. The decision poses a noteworthy warning signal to legal…
In a move that will undoubtedly be of interest to many of our readers, particularly those working as investment advisers, the U.S. Securities and Exchange Commission (SEC) has recently reopened the comment period for proposed changes to Rule 206(4)-2 under the Advisers Act, commonly known as the “Current Custody Rule”. This rule specifically governs how…