On November 4, 2022, compliance with amended Rule 206(4)-1 (the “Marketing Rule”) became mandatory for all investment advisers registered with the Securities and Exchange Commission (the “SEC”).[1] Seven months since the compliance date, SEC-registered investment advisers continue to discover and adapt to challenges in applying the Marketing Rule. Newly formed advisers also face significant
The Trend Continues: Increased Regulatory Focus on Privacy & Cybersecurity for Private Funds
Recent enforcement actions highlight the increased regulatory scrutiny that private funds may face with respect to internal cybersecurity protocols and responses to cyber-crimes and cyber incidents under new and updated cybersecurity laws.
In January 2023, the New York Department of Financial Services (DFS) announced sanctions against Coinbase, finding “significant failings in the company’s compliance program.”
Regulators’ Increased Focus on GP-Led Secondaries and Continuation Funds
As IPOs and other traditional paths to liquidity for private assets have become more challenging, GP-led secondary transactions have emerged as a powerful and popular tool across closed-end private funds, leading to explosive growth over the last five years. And while macro factors influence their prevalence year over year, these transactions remain broadly popular across the
Energy Transition: A New Risk Climate for Investors
Go to any private equity event in the last 12 months, and “energy transition” will have been discussed, meaning the shift in energy production away from fossil‑based systems to low or zero carbon ones. As fund managers continue to raise funds focused on investments in this sector, we see no reason for this trend to
Ripples Following the SPAC Wave: Litigation and Regulatory Risks
It’s a pattern we often see in boom-and-bust cycles—disputes rising in the period after a wave crests. SPAC deal volume hit an unprecedented high in 2021, but then slowed down in 2022 alongside IPOs. However, the fallout from the SPAC wave will continue to unfold this year, generating increased regulatory attention and a growing number of
Messaging Missteps: SEC’s Increasing Focus on Off-Channel Communications
The SEC’s Enforcement Division is conducting a sweep investigation of large investment advisers regarding their employees’ use of “off-channel” communications. The sweep, which has been widely reported in the press, focuses on text messages from personal phones, personal email, WhatsApp and other platforms not typically captured or monitored by advisers. The sweep is causing
SEC Overreach:Insurers Underwrite?
The SEC spent 2022 making multiple and sweeping proposals to amend rules under the Advisers Act, many of which have the ability to significantly re-shape market standards for private funds. Here, we focus on the SEC’s proposal to undo a common protection for private fund advisers – the ability to rely, as against the
Four Key Takeaways from the FTC Director’s Remarks on the Proposed Rule to Ban Non-Compete Agreements
- The FTC recognizes this policy could potentially have far-reaching implications across industries and encompass “functional non-competes.” Wilkins explained that the proposed rule would apply to “all workers” who are “under the jurisdiction of the FTC,” whether an employee is paid, unpaid, or an independent contractor. Throughout the interview, Wilkins described how other types of
A New Dawn for the FTC: Eschewing Traditional Antitrust Laws to Challenge Non-Competes Using Section 5 Powers
The FTC set its sights on non-compete agreements as it debuts its powers under Section 5 of the FTC Act—demanding more of employers than is required under traditional antitrust laws.
Through Section 5 of the FTC Act, Congress affords the FTC the unique ability to identify and police against “unfair methods of competition,” beyond the contours of other antitrust statutes—namely, the Sherman and Clayton Acts. In the past, the FTC’s policy has been to employ Section 5 in a limited set of circumstances invoking “the promotion of consumer welfare.” In a statement made on November 10, 2022, the FTC shed its previous policy in favor of a more expansive and amorphous view of its statutory authority under Section 5. According to the FTC’s “non-exclusive set of examples of conduct,” unfair methods of competition include: (i) mergers and exclusive dealing arrangements that “have the tendency to ripen into violations of the antitrust laws;” (ii) “practices that facilitate tacit coordination;” and (iii) “parallel exclusionary conduct that may cause aggregate harm.” As a result of the FTC’s “know it when you see it” approach, practitioners and professionals were left in the dark as to how the FTC would choose to exercise its Section 5 authority.
Three Notable Antitrust & Tech Updates That May Have Flown Under Your Radar
Antitrust and tech is in the legal news almost daily, and often multiple times a day. Here are a few recent developments with notable implications that may have flown under the radar: 1) renewed focus on gig economy issues; 2) potential enforcement efforts regarding director overlaps; and 3) challenges to MFN pricing.