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Pay for Performance from Future Fund Flows

Michael Weisbach Professor and Ralph W. Kurtz Chair in Finance at The Ohio State University, and his colleagues, Ji-Woong Chung, Berk A. Sensoy and Léa H. Stern, are looking at the effect of the pay for performance at private equity funds. One hand, there is the current income from management...

The SEC’s Asset Management Unit

Yesterday, Bruce Carton of Securities Docket hosted a webinar: The SEC's Asset Management Unit and Strategies for Avoiding Trouble in 2011 and Beyond . He managed to get Bruce Karpati, the co-head of the SEC's Asset Management unit, to participate. Also joining the presentation were John...

Sometimes You Get Stuck and Can’t Get Out

Finally, the SEC is going to take some action today on the regulation of investment advisers, venture capital funds, and private fund managers. For years, they've been trying to get regulatory control of private funds. Now they are going to get it. Do they really want it? Sometimes what...

Private Equity Exemption Bill Moves Ahead

The Small Business Capital Access and Job Preservation Act , H.R. 1082, took another step forward this week when it was approved by the House Committee on Financial Services. It still has a long way to go before coming law so this is no time to stop getting your compliance infrastructure in place...

Form PF and Private Funds

In addition to filing Form ADV with the SEC when they register with the Securities and Exchange Commission, private fund managers will also need to start filing Form PF next year. The amount of information required by Form PF is tiered. Advisers managing less than $150 million in private funds...

Massachusetts Revises Proposed Private Fund Adviser Exemption

From my discussions, many real estate fund managers are still not sure if they are subject to registration under the Investment Advisers Act. The definition of "private fund" can exclude many real estate funds depending on the structure of their investments. I think the result is that you...

Thoughts on Private Fund Adviser Reporting

This past week, the SEC and CFTC jointly adopted rules regarding the new Form PF that certain fund managers will need to file under the Adviser's Act. The form will require advisers to disclosure detailed information about their funds' holdings and investments to federal regulators. We've...

US Private Equity Fund Compliance Companion

If you are looking for a good guide to help your private equity compliance program, PEI Media's US Private Equity Fund Compliance Guide is a good place to start. There have been a few changes since its publication in 2010. PEI Media has just published the US Private Equity Fund Compliance Companion...

Should Private Funds Be Exempt from the Ban on General Solicitation?

The Managed Funds Association recently submitted a comment letter to the Securities and Exchange Commission dated January 6, 2012 requesting the SEC to amend Rule 502(c) of Regulation D to exempt private funds, such as hedge funds, private equity funds, and venture capital funds, from the ban on general...

SEC Sweep Letter for Private Equity Funds

The San Francisco Office of the SEC has an informal inquiry into the valuations of private equity funds. IA Watch has received a copy of the sweep letter from the Division of Enforcement directed to a private equity fund manager. Some highlights in the request: All formation and offering...

Proposed Identity Theft Red Flags Rules

Identity theft is a serious problem. Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act increased the scope of firms that would be subject to federal regulatory requirements on identity theft rules. The Securities Exchange Commission and the Commodities Futures Trading Commission...

Valuations, Private Equity, and the SEC

The SEC has been poking around valuations for a while. First it was from the chaos of the 2008 financial crisis. The sudden illiquidity and drop in prices left many scratching their heads about the proper valuations for their assets. That was the main charge against the Bear Stearns hedge fund...

SEC, CFTC Adopt Form PF for Systemic Risk Data Reporting by Private Fund Advisers

An EIA which summarizes the new Form PF adopted on October 21, 2011 by the Securities and Exchange Commission. This form is used to collect information from private fund advisers, primarily to assist the Financial Stability Oversight Council ("FSOC") in determining whether any such funds present...

You Cannot 'Crowdfund' a Fund (in Case You Were Wondering)

Crowdfunding may provide an interesting way for some companies to raise capital. It's definitely getting a lot of the hype since passage of the Jumpstart Our Business Startups ( JOBS ) Act earlier this month. I've read articles talking about how crowdfunding is going to disrupt funding for...

CFTC Rescinds a Popular Private Fund Manager Exemption

Excerpt: On February 8, 2012, the Commodity Futures Trading Commission ("CFTC" or "Commission") issued final regulations that repeal the commodity pool operator ("CPO") registration exemption widely used by the operators of private funds offered only to highly sophisticated...

SEC Enforcement Division’s Asset Management Unit’s Chief Anticipates Increase in Private Equity Enforcement

Bruce Karpati, the Chief of the SEC Enforcement Division's Asset Management Unit, held a Q&A session entitled " Private Equity Enforcement Concerns " at the Private Equity International Conference held in New York on January 23, 2013. He addressed private equity firm activities...

Hedge Funds And Money Laundering

There are indications from Washington that hedge funds, long exempt from anti-money laundering reporting rules, may soon be brought into the fold under new rules proposed by the Treasury Department's Financial Crimes Enforcement Network (FinCEN). Rule-making issues aside, hedge fund managers...

Washington State to Regulate Fund Managers

This article is also appearing on The Venture Alley and on Startup Law Blog . Per the authors, readers may feel free to re-post this content elsewhere as well. The world is changing for venture funds and similar funds in Washington State, and not necessarily for the better. It used to be the case...

First Circuit: Private Equity Fund Liable for Bankrupt Portfolio Company's Pension Obligations

On July 24, 2013, in a case the court said was one of “first impression,” the First Circuit held that, due to the nature of its involvement in the management of its portfolio company’s operations, a private equity firm was potentially liable for the portfolio company’s pension...

Perkins Coie LLP on Britt v. Twin City: Private Equity Firms Should Review the Scope of the Insurance Purchased to Cover Claims Against Them and the Individuals They Place as Directors

Excerpt: The recent decision in Britt v. Twin City Fire Insurance Co. , C.A. No. 8SACV 12-1355-JST (JPRx), slip op. (C.D. Cal. June 26, 2013), highlights some important insurance considerations for private equity funds and the individuals they place as directors or officers at portfolio companies...

U.S. Regulation, Express Delivered Overseas

In a series of recent conversations with industry colleagues around the world, one of the recurring themes has been the growing risk of regulatory investigation and enforcement action companies outside the U.S. are facing. One very particular aspect of the companies’ growing risk is that it frequently...

Government Shutdown Impact on Hedge Funds

The impact of the October 1 shutdown of the federal government on hedge funds is now playing out in slow motion. While the SEC remains open due to its ability to self-fund for a few weeks, its sister agency, the CFTC has shut down. These are the agencies that provide oversight to the securities and commodities...

Hedge Funds Wrestle with Employee Personal Account Trading Conflicts

Trading ahead of client accounts. Insider trading. Breach of fiduciary duty. These were just some of the concerns that the SEC had when it adopted the requirement for investment advisers to establish policies to monitor employee personal trading in 2004. While seemingly straightforward, in the decade...

SEC Sanctions KKR Over Fee Allocations

The SEC filed its first action involving a private equity fund and broken deal expenses. By the time the Commission discovered the question the firm realized it did not have a disclosure policy, retained a consultant to study the issue and adopted a policy. Nevertheless, to settle the proceeding the...

SEC Settles With Blackstone on Disclosure Issues

The SEC’s Asset Management Unit continues to review and analyze fees, expenses and the related disclosure at private equity firms. The Unit has encouraged advisers to self-report these issues. The most recent action emanating from the review involves three Blackstone Group L.P. investment advisers...