Robust Product Due Diligence: It’s A Necessity, Not an Option!

New product offerings continue to proliferate as Wall Street strives to meet consumer demand. What is driving this process? Among other factors, today’s low interest rate environment has all investors chasing yields into potentially unknown territory, perhaps without fully understanding all of the risks involved. Increasingly, institutional investors, who are generally sophisticated investors experienced at evaluating risks, are seeking higher yielding investments by allocating more dollars to alternative investments such as hedge or private equity funds. Meanwhile, retail investors, who may not be experienced at evaluating these risks, continue to be deeply concerned about accumulating sufficient assets to generate retirement income, thereby nudging them to take on more risk to generate higher returns and, many would argue, without understanding the risk vs. reward trade-off. An investment adviser or registered representative also must have the relevant experience to evaluate such risks.

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Do your Fund Documents Clearly Disclose Receipt of Accelerated Monitoring Fees?

Somewhat more reminiscent of the broken-windows enforcement era, two affiliated private equity advisers managing billions settled with the SEC on charges that they failed to make pre-commitment disclosures in fund governing documents related to accelerated fees received from portfolio companies. Interestingly, according to the Settlement Order, the advisers had made some disclosures in fund documents … Continued

With New Risk Alert, SEC Doubles Down on Best Execution

On July 11, 2018, the SEC issued a Risk Alert outlining commonly found compliance issues related to best execution by investment advisers. Advisers have an obligation to seek best execution of client transactions, taking into consideration quantitative factors such as execution quality and commission rate, as well as more qualitative factors such as the value … Continued

The Cost of Compliance: Understanding and Leveraging Resources

For compliance officers, obtaining the necessary tools and resources to build an effective compliance program can be costly and difficult to implement. How do you distinguish the best in class, the most cost-efficient and effective for use in your program? In this ComplianceCast, speakers David Porteous of Faegre Baker Daniels and Korrine Kohm of Ascendant … Continued

California Privacy Law Brings GDPR-Lite to the U.S.

New Act Will Give Consumers Rights to Access and Delete Their Data In what has become an ongoing race among states to have the toughest privacy regulation in the U.S., California has jumped to the front. On June 28, 2018, California’s legislature unanimously passed a privacy bill that was later signed by Governor Jerry Brown, … Continued

SEC Deficiency Letters Require Swift Action

On the topic of SEC Deficiency Letters, if you have received one, you must promptly take corrective action. The SEC will not tolerate inappropriate delay. The SEC recently imposed an $8 million civil penalty on an adviser who, among other things, failed to promptly take corrective action in its Form ADV filing, following receipt of … Continued

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