Compliance Avenue

With the Financial Regulatory Reform Bill having been recently signed into law, advisors to hedge funds and private equity funds need to be aware and fully informed about the SEC registration process: what it means for their business and how to prepare.

On Wednesday July 28th, HedgeOp Compliance CEO Bill Mulligan and other members of HedgeOp’s professional staff held a practical and informative webinar discussing the following key areas:

• What are the mechanics of SEC registration? What does the process involve?
• The top 10 things Private Fund Advisors need to know about developing an Advisers Act compliance program.
• How can technology help you in the process?

You can watch the seminar and download the presentation materials below.

Download Presentation Materials

In this day and age of digital communications where advisers distribute performance information, client newsletters and other sensitive communications via email, it is a best practice (and smart business move) for advisers to require all personnel to utilize a standard disclaimer underneath their email signature.   After the jump, you will find a sample of a recommended disclaimer.

Read the rest of this entry »

Right on the heels of the cloture vote last night, the Senate passed its Financial Overhaul / Regulatory Reform bill in a 59-39 vote. 4 Republican senators voted for the bill.  As the bill stands now, hedge fund managers with greater than $100 million AUM will need to become registered advisers with the SEC.  The bill still needs to be reconciled with the House version which was passed in December.   A final bill may get to President Obama’s desk by July or sooner.

In a 60-40 vote today, the US Senate passed the cloture vote needed to end debate on the Financial Reform Legislation.   A final vote on the bill itself may come as early as tomorrow.   If passed, it will then need to be reconciled with the House bill.

Just a reminder for all registered investment advisers that annual Form ADV Part 1 updates are due at the end of this month.   ADV Part 1 is filed/updated electronically via the IARD system.

This time of year is also a good opportunity to familiarize yourself with the list of changes to your business that may require a “prompt” ADV update during the year.  You can read our ADV Basics post for the details.

HedgeOp Compliance, LLC will be holding a free webinar next week on March 24th on the topic of: “Conducting an Annual Compliance Review.”

This seminar will look at HedgeOp’s suggested method for conducting an annual review including: review of compliance inventory items, conflicts of interest of review, use of employee and service provider questionnaires and more. Please note that this seminar is not only geared towards SEC-registered managers, but also unregistered managers looking to conduct an annual compliance review as a form of “best practice.”

You can view more information and register for the event here.

It is expected that Senator Chris Dodd will release his Financial Regulatory Reform bill on Monday.   Work on a bi-partisan package fell through, but it is expected that Dodd’s proposal will include several agreements made with Republican Senator Bob Corker.   The Investment Adviser Association is concerned about certain expected provisions of the bill:

The IAA is especially concerned about provisions in the bill that may address the “harmonization” of broker-dealer and investment adviser regulation and issues relating to whether fiduciary obligations should be extended to others who provide investment advice.  Although not yet certain, we expect that the Dodd legislation is likely to include provisions that require the SEC to conduct a study to (1) determine appropriate obligations of broker-dealers and investment advisers, particularly as they relate to personalized investment advice about securities to retail customers; to (2) provide for a report by the Commission to Congress in 18 months; and to (3) require a rulemaking by the SEC to address regulatory gaps and overlap in regulation identified by the study.

Like all of the financial reform bill’s that we have seen over the past 12 months, Dodd’s bill is most certainly going to include the registration of hedge fund managers.

According to Reuters today, the SEC is planning on beefing up its New York office staff by about 8% this year, partly to focus more efforts on regulating the NY hedge fund industry:

The agency plans to hire 18 people on the enforcement side, where it currently employs about 150 people in New York, and add 15 people to its examinations staff, which currently numbers about 210 in New York, Mr. Canellos said at the Reuters Private Equity and Hedge Funds Summit in New York.

The push to hire more lawyers, accountants and even former traders comes at a time that the agency is seeking to become more aggressive in going after the bad guys on Wall Street.

This comes on the heels of comments made by Bruce Karpati, the co-chief of the SEC’s asset management unit, pushing for hedge fund registration.   Mr. Karpati is hoping for more disclosures by hedge fund managers and stated at a recent conference:

“When you have more (hedge fund advisers) that are registered, we will have more access to information,”

As congress makes slow progress on its regulatory reform bill, the SEC is clearly gearing up for the expected registration of hedge fund managers.

According to the Associated Press, lawmakers in Connecticut, may be gearing up to pass hedge fund legislation in their state.  Last year, the state legislature failed to pass a bill which would have required hedge funds and private equity firms to disclose certain conflicts of interest.  Some state lawmakers are looking to use that bill as a starting point for new hedge fund legislation.

Hedge fund regulation on the federal seems to be stuck in the Senate right now.  Although the house has already passed their financial reform bill (which includes hedge fund registration), the Senate version seems to be stuck.  It looks like some Connecticut legislators have gotten fed up with the slow progress and may take their own steps towards regulation for hedge funds in the state.

HedgeOp Compliance, LLC will be holding a free webinar on March 24th on: “Conducting an Annual Compliance Review.”

This seminar will look at HedgeOp’s suggested method for conducting an annual review including: review of compliance inventory items, conflicts of interest of review, use of employee and service provider questionnaires and more.  Please note that this seminar is not only geared towards SEC-registered managers, but also unregistered managers looking to conduct an annual compliance review as a form of “best practice.”

You can view more information and register for the event here.