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SEC Announces 2019 Examination Priorities

On December 20, 2018, the Office of Compliance Inspections and Examinations (“OCIE“) of the Securities and Exchange Commission (the “SEC“) announced its 2019 examination priorities for registered investment advisers.[1] OCIE grouped the priorities into six general thematic areas: (1) matters of importance to retail investors, including seniors and those saving for retirement; (2) compliance and…

Client Alerts | January 8, 2019

Tax Planning for Losses

This newsletter is a brief follow-up to our recent year-end tax newsletter. Click here for our year-end newsletter. Since our 2018 year-end newsletter was distributed, the stock market has been very volatile and decreased significantly (although the market was up a lot today, December 26th, fortunately). Many funds may have significant unrealized losses. This newsletter…

Client Alerts | December 26, 2018 | Hedge Funds

Investment Adviser Compliance Issues Related to the Cash Solicitation Rule

On October 31, 2018, the staff in the Office of Compliance Inspections and Examinations (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC”) issued a risk alert (the “Risk Alert”)[1] describing some of the most common deficiencies the Staff has cited relating to Rule 206(4)-3 (the “Cash Solicitation Rule”) under the Investment Advisers…

Client Alerts | December 18, 2018 | Hedge Funds

Court Balks at SEC’s Attempt to Prohibit ICO, but Vague on SEC’s Regulation of Digital Assets

The recent proliferation of cryptocurrencies, digital tokens and initial coin offerings (ICOs), facilitated by advances in blockchain and other distributed ledger technologies, has engendered substantial optimism among segments of the investing public. Some envision that these developments will transform financial markets and systems, and hope to benefit from these changes through early investments in digital…

Client Alerts | December 4, 2018

SEC Withdraws Two No-Action Letters Concerning Proxy Advisory Firms

The Securities and Exchange Commission’s (the “SEC“) Division of Investment Management has announced the withdrawal of two no-action letters[1] that provided guidance to registered investment advisers regarding their use of proxy advisory firms consistent with Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended (the “Proxy Rule“). [2] Under the Proxy Rule, registered…

Client Alerts | October 24, 2018 | Investor Activism | Hedge Funds

So You Manage a Fund? Watch Out for the Excess Business Loss Rules!

Following tax reform, there is a restriction on the deductibility of business expenses. Under the new “excess business loss” rules, trade or business expenses are not deductible to the extent they exceed trade or business income. (Provided that taxpayers filing joint returns are allowed to deduct up to $500,000 of such excess expenses, and other…

Client Alerts | October 18, 2018 | Hedge Funds

Update: NFA Releases Effective Date(s) for Interpretive Notice Establishing Disclosure Requirements for Registered CPOs/CTAs Engaging in Virtual Currency Activities

On July 20, 2018, the National Futures Association (“NFA”) issued an interpretive notice (the “Interpretive Notice”) detailing new disclosure requirements for registered commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) to address certain risks stemming from the recent growth of the virtual currency and virtual currency derivatives markets.[1] On August 9, 2018, the NFA issued…

Client Alerts | August 16, 2018 | Hedge Funds

NFA Issues New Disclosure Requirements for Registered CPOs/CTAs Engaging in Virtual Currency Activities

On July 20, 2018, the National Futures Association (“NFA”) issued new disclosure requirements for registered commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) to address certain risks stemming from the recent growth of the virtual currency and virtual currency derivatives markets. The new requirements will require, among other things, CPOs and CTAs trading in…

Client Alerts | August 7, 2018 | Hedge Funds

SEC Regulatory Roundup: Best Execution, Pay-to-Play and Advertising Red Flags for Private Fund Managers

On July 11, 2018, the staff in the Office of Compliance Inspections and Examinations (the “Staff“) of the U.S. Securities and Exchange Commission (the “SEC“) issued a risk alert (the “Risk Alert”)[1] describing many of the most common best execution-related deficiencies cited by the Staff in recent examinations of investment advisers. In addition, on July…

Client Alerts | August 7, 2018 | Hedge Funds