By William Kelly and Simon Riveles On December 18, the SEC staff issued a report summarizing its review of the accredited investor definition. The report offers historical and current analyses of the definition, evaluates relevant comments on and suggested modifications to the definition, and considers alternative approaches under federal and state securities laws for identifying financially sophisticated investors. The report concludes with SEC staff recommendations …
CFTC Approves NFA Cybersecurity Interpretive Notice
By William Kelly Acknowledging the rapid evolution of information technology and correspondent threats, on August 20, 2015 the National Futures Association (“NFA”) issued an Interpretive Notice addressing cybersecurity concerns. The Interpretive Notice established general requirements relating to the information systems security programs (“ISSPs”) of futures commission merchants, commodity trading advisors, commodity pool operators, introducing brokers, retail foreign exchange dealers, swap dealers, and major swap participants …
Proposed IRS Regulations Target Management Fee Waivers in Exchange for Partnership Interests
By Lauren Mack On July 22, 2015, the IRS issued a notice of proposed rulemaking regarding the classification of management fee waivers in exchange for partnership interests as disguised payment for services. Under the proposed regulations, allocations of income to partners that provide services to the partnership that lack “significant entrepreneurial risk” will be recharacterized by the IRS as payments for services. Background In 1984, …
FinCEN Proposes Long-Expected AML Rule for Investment Advisers
By William Kelly On August 25th, the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) proposed a new rule applicable to investment advisers. At its core, the proposal seeks to extend anti-money laundering (“AML”) obligations imposed under the Bank Secrecy Act (“BSA”) to registered investment advisers. This proposal comes as little surprise, as the Treasury Department has long contemplated the extension of AML regulations to investments …
SEC Issues New Guidance on General Solicitation and Advertising in Regulation D Offerings
By Lauren Mack On August 6, 2015, the SEC’s Division of Corporation Finance (“DCF”) updated its Compliance and Disclosure Interpretations (“CDI”) with eleven new CDI on general solicitation and advertising in Regulation D offerings. That same day, the DCF also issued a no-action letter finding that an online venture capital firm’s procedures for creating online pre-existing substantial relationships did not constitute general solicitation and advertising …
AIFMD and Potential Extension of the EU Passport to the U.S
By Lauren Mack and Simon Riveles The Alternative Investment Fund Managers Directive (“AIFMD”) governs Alternative Investment Fund Managers (“AIFMs”) and Alternative Investment Funds (“AIFs”) in the European Union (“EU”) and seeks to harmonize the applicable regulations throughout the member states of the EU. Among its regulations are two different paths that AIFMs planning to market to EU investors may take: (a) minimum requirements for the …
Real Estate Fund Managers: Is Investment Adviser Registration Required?
By William Kelly Firms and individuals required to register as investment advisers and associated persons face a throng of regulatory requirements and restrictions. Under the Investment Advisers Act of 1940 (“Advisers Act”), investment advisers with assets under management (“AUM”) of $100 or more generally must register with the SEC. Registered investment advisers must maintain extensive records and are subject to ongoing SEC examination and reporting …
SEC Unanimously Approves Regulation A+ Rules
On Wednesday March 25th, 2015, the Securities & Exchange Commission (SEC) unanimously adopted amendments to Regulation A. Due to its low dollar threshold and failure to preempt state blue sky laws, Regulation A has heretofore been a little utilized exemption from registration for certain smaller offerings by private companies. The amendments, mandated by Title IV of the JOBS Act, and commonly known as Regulation A+, …