We wish all of our readers a healthy and happy holidays!
Dec
21
On December 9, 2009, the House passed a new tax bill, entitled the Tax Extenders Act of 2009, which would, among other things, change the tax treatment of performance allocations. Under the proposed bill, income derived from a service provider’s “incentive allocation” or “carried interest” in an investment partnership would be taxed as ordinary income (as opposed to the current capital gains treatment) that is subject to self-employment taxes.
Dec
21
Reg S-P has been mentioned quite frequently on this site. In March 2008, the SEC released a set of proposed amendments to Regulation S-P which seek to require registered investment advisers to enhance the protection of consumer financial information. If adopted, the proposed amendments would require advisers to expand existing safeguards into a more expansive “information security program”.
HedgeOp Compliance CEO, Bill Mulligan conducted a webinar on these proposed changes, specifically focusing on: helping investment adviser’s understand the expanded requirements under the proposal and discussing the hot button topics such as: (i) the identification of reasonably foreseeable risks at your firm; (ii) designing information safeguards to control/manage the identified risks; (iii) setting up a plan for testing and training for staff; (iv) evaluating the programs of your service providers; and (v) developing and reviewing your procedures related to unauthorized access of confidential data.
You can view a video recording of this webinar and download the presentation materials below.
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Dec
17
The SEC has extended the compliance date for Regulation S-AM from January 1, 2010 to August 1, 2010. Regulation S-AM, which is a new rule that was adopted by the SEC on August 9, 2009, limits the use by certain “persons” of information received from an affiliate to solicit a consumer for marketing purposes unless the consumer has been given notice and a reasonable opportunity and a reasonable and simple method to opt out of such solicitations.
Dec
16
The SEC today announced in a press release that they have approved certain amendments to the Advisers Act custody rule (Rule 206(4)-2)), which rule is applicable to investment advisers registered with the SEC. The SEC originally proposed amendments to the custody rule in May 2009. The amendments contained in the May 2009 Proposing Release would (among other things):
Dec
13
This past Friday the sole managing member of Westgate Capital Management LLC (the “Fund”), James Nicholson, pleaded guilty to securities fraud, investment adviser fraud and mail fraud which are subject to the following maximum penalties:
The fraud allegedly began back in 2004 with Nicholson falsely representing to investors that Westgate’s funds had assets under management ranging from $600 million to $900 million, when in fact only about $50 million to $60 million were actually invested. These misrepresentations came to light last December when checks totaling around $5 million for nearly two dozen investors bounced during their attempt to redeem. Prosecutors and Nicholson himself admitted that:
- financial records were falsified,
- no legitimate and independent accounting firm auditing the Fund existed,
- there was no actual office verifiable for the supposed auditor
Had a thorough due diligence check on the Fund and Mr. Nicholson been conducted earlier on, perhaps investors may have been spared the $133 million loss that occured as a result of Mr. Nicholson’s fraudulent activities.
Dec
11
One year ago today, Bernard Madoff was arrested and charged with securities fraud in a $50 billion Ponzi scheme that affected thousands of investors. It was an investment scandal that rocked Wall Street and raised concerns and awareness on all levels. As a result, stricter regulations and much needed reforms and due diligence on how the Securities and Exchange Commission intends to respond to and review allegations of fraud have been implemented.
Briefly stated those reforms include:
Dec
9
A few weeks ago, the Commodity Futures Trading Commission (”CFTC”) issued amendments to regulations covering periodic account statements and annual reports that Commodity Pool Operators (”CPOs”) need to prepare and distribute for the commodity pools the CPOs operate. Several of the amendments will impact the reporting that is presently prepared and distributed by CPOs that operate pools in accordance with CFTC Regulation 4.7 (”4.7 Pools”). Furthermore, one of the amendments impacts the annual reports prepared and distributed by those claiming exemptions from registration in accordance with CFTC Regulations 4.13(a)(3) or 4.13(a)(4). These amendments will become effective today and changes that affect annual financial reports will apply to annual reports distributed for fiscal years ending December 31, 2009 and later.
This post only summarizes the amendment provisions. You can view the final rule release here. Read the rest of this entry »
Dec
3
Going back to yesterday’s subject of privacy forms, I thought it would be good to focus on some of the basics of Reg S-P from the perspective of an investment adviser. When developing privacy policies, all investment advisers should understand the following: Read the rest of this entry »
Dec
2
The SEC is clearly continuing their interest in insider trading as they have reportedly sent dozens of subpoenas to hedge fund managers and brokers. From FINalternatives:
The regulator has sent at least three dozen such subpoenas to hedge funds and brokerages, The Wall Street Journal reports. According to the newspaper, at least some of the managers receiving the subpoenas were surprised by their scope and is causing fear that the SEC may come down hard on what have become common practices in the industry.
