Following its adoption almost one year ago of amended rules accelerating filing deadlines for Schedules 13G and 13D (and the imminent effectiveness of the new deadlines for 13Gs), the SEC has continued to bring enforcement cases focusing on the timing of initial filings, amendments, and transitions from Schedule 13G to 13D, as well as Section
Harris’s Running Mate Announcement: Pay-to-Play Rule Implications for Investment Advisers
As reported today, Vice President Harris has announced Tim Walz, the sitting governor of Minnesota, as her running mate. This announcement is particularly significant for investment advisers due to the Advisers Act Political Contributions Rule, otherwise known as the “pay-to-play” rule.
Unrepresentative Returns: SEC Sanctions Hedge Fund Manager for Misleading Marketing Practices
On June 14, 2024, the SEC announced an enforcement action settlement with a Pennsylvania-based hedge fund manager for violating the Marketing Rule under the Investment Advisers Act. The SEC found that the adviser had misled investors by advertising a hedge fund’s investment performance based on the investment performance of a single investor in the fund.
SEC Adopts Rule Amendments to Regulation S-P to Enhance Protection of Customer Information
On May 16, 2024, the U.S. Securities and Exchange Commission announced the adoption of amendments to Regulation S-P that were proposed last year. The Final Amendments impose enhanced requirements on registered investment advisers, investment companies, broker dealers and transfer agents with respect to handling of consumer financial information.
U.S. District Court in Alabama Finds the Corporate Transparency Act Unconstitutional
On March 1, 2024, Judge Liles C. Burke of the U.S. District Court for the Northern District of Alabama ruled that the Corporate Transparency Act (the “CTA”) is unconstitutional[1], leaving its future uncertain. The CTA requires reporting companies to report to FinCEN information about their beneficial owners and company applicants and is intended to help prevent and combat money laundering, terrorist financing, tax fraud and other illicit activity. The ruling enjoined U.S. Department of the Treasury, FinCEN and any other federal agency from enforcing the CTA against the plaintiffs but introduces uncertainty as to the applicability to other reporting companies.
FINRA Proposes to Amend Rule 2210 to Permit Projected Performance and Targeted Returns in Institutional Communications
On November 13, 2023, FINRA filed with the SEC a proposal to amendment to Rule 2210 that would create a tailored exception from the general prohibition on projections in marketing materials and other communications with institutional investors, including marketing decks and pitch books for private placements in investment funds and other securities.
FINRA Rule 2210(d)(1)(F) currently prohibits any member from including a projected performance in a written communication — retail or institutional. The amendment would provide a limited exception for performance projections or targeted returns in written communications distributed or made available only to “institutional investors.” An “institutional investor” is defined in Rule 2210(a)(4) to include banks, insurance companies, government agencies, employee benefit plans, registered investment companies, registered investment advisers, as well as any other person (individual or entity) with total assets of at least $50 million.
The Countdown Starts: Compliance Dates Set for Private Fund Adviser Rules
Earlier today, the SEC’s Private Fund Adviser Rules were published in the Federal Register. As with all federal regulations, publication in the Federal Register begins the countdown to the Rules’ compliance dates. These dates are listed in the table below. Please see our prior alerts for an overview of the Rules’ provisions, a
Lawsuit Challenges Private Fund Adviser Rules
On Friday, September 1, 2023, a lawsuit was filed with the federal Court of Appeals in the Fifth Circuit challenging the validity and enforceability of the recently adopted Private Fund Adviser Rules under the Investment Advisers Act of 1940 (the “Advisers Act”). (Please see our prior alerts for a description of the Rules’ provisions and
Second Circuit Holds That the Syndicated Term Loans in Kirschner Are Not Securities
On August 24, 2023, the Second Circuit Court of Appeals issued its much-anticipated decision in Kirschner v. JP Morgan Chase Bank, holding that the syndicate term loans at issue were not securities. As noted in our earlier blog post, the SEC declined the court’s request to file an amicus brief, forgoing the opportunity
Relief for Non-U.S. Investment Advisers: SEC Clarifies the Extraterritorial Limits of the New Private Fund Adviser Rules
On August 23, 2023, the U.S. Securities and Exchange Commission (“SEC”) adopted its highly anticipated new rules and amendments to existing rules under the Investment Advisers Act of 1940 (“Advisers Act”) impacting private fund advisers (“Private Fund Adviser Rules” or the “Rules”).[1] In a welcome development, the SEC confirmed in its Adopting Release that