Fairview Flash Reports


Legal Risks Associated with Cyberattacks

May 24, 2017 - Recent cyberattacks have highlighted the value of obaining legal counsel prior to a potential security breach.
Read Full Story

Labor Secretary Acosta Declines to Delay the Fiduciary Rule

May 23, 2017 - Labor Secretary Acosta confirmed that the implementation date for the Fiduciary Rule is June 9, 2017.
Read Full Story

SEC Releases Risk Alert on Ransomware

May 18, 2017 - The SEC released a risk alert on a widespread ransomware attack and encourages broker-dealers and investment advisers to take the appropriate measures to improve their cybersecurity.
Read Full Story

SEC Amends Form ADV Part 1A and the Advisers Act

May 17, 2017 - The SEC adopted amendments to Part 1A of Form ADV and the Advisers Act to ehance the monitoring of risks in the investment management industry.
Read Full Story

SEC Takes Strict Stance on General Solicitations of Certain Regulation D Offerings

May 15, 2017 - The SEC has affirmed its zero-tolerance policy for general solicitations of specific Regulation D offerings.
Read Full Story 

Jay Clayton Sworn in as Chairman of the SEC

May 8, 2017 - Jay Clayton was sworn in as the 32nd Chairman of the SEC on May 4, 2017.
Read Full Story 

CFA Institue Issues Guidance Statement on Broadly Distributed Pooled Funds

April 19, 2017 - The CFA Institute has released new requirements and recommendations on broadly distributed pooled funds for firms that claim to be GIPS compliant.
Read Full Story

CCO Charged with Inadequate Form ADV Disclosures

April 12, 2017 - The SEC has charged the CCO of a registered investment adviser with failing to disclose conflicts of interest with clients and the firm's deteriorating financial condition. 
Read Full Story

Applicability Date of the Fiduciary Rule Extended

April 6, 2017 - The DOL has extended the applicability date of the Fiduciary Rule to June 9, 2017.
Read Full Story 

Adviser Charged with Failing to Report Business-Related Electronic Communications

March 22, 2017 - The SEC charged an investment adviser representative with failing to archive written communications through personal communication devices that solicited client investments.
Read Full Story

DOL Issues Enforcement Memorandum Concerning the Fiduciary Rule

March 14, 2017 - The DOL has released an enforcement memorandum to address confusion relating to the Fiduciary Rule and its implementation date.
Read Full Story

Phishing Emails Target EDGAR Filers

March 10, 2017 - The SEC has announced that there has been a rise in the number of phishing emails intended to infiltrate company network systems and obtain non-public information.
Read Full Story

Adviser Barred for Conducting Private Sales Without Broker-Dealer Registration

March 3, 2017 - The SEC has charged an adviser with soliciting and inducing investors to purchase promissory notes without registering as a broker-dealer.
Read Full Story 

DOL Proposes Delay of Fiduciary Rule

March 1, 2017 - The DOL has proposed the extension of the Fiduciary Rule's applicability date from April 10, 2017 to June 9, 2017.
Read Full Story 

SEC Releases 'No-Action' Letter Concerning the Custody Rule

February 23, 2017 - The SEC has released a 'no-action' letter to address how first-party and third-party money movement can trigger custody.
Read Full Story

Office of Management and Budget Receives DOL Rule Delay

February 10, 2017 - The DOL has sent paperwork to the OMB requesting a delay in the implementation of the fiduciary rule. Read Full Story 

Unregistered Fund Manager Charged with Violating Anti-Fraud Rules

February 7, 2017 - The SEC has filed charges against an unregistered fund manager for engaging in a misappropriation scheme. 
Read Full Story

DOL Fiduciary Rule to be Delayed and Dodd-Frank Act to be Reviewed by the President's Executive Actions

February 3, 2017 - President Trump has signed two executive orders intended to further evaluate the Fiduciary Rule and Dodd-Frank Act. 
Read Full Story

House Passes Bill Limiting SEC's Ability to Create Regulations

On January 12, 2017, the House passed the SEC Regulatory Accountability Act, H.R. 78, limiting the SEC's rule-making powers. 
Read Full Story

OCIE Announces Examination Examination Priorities for 2017

OCIE announces Examination Priorities for 2017 to identify potential areas of heightened risk. 
Read Full Story

SEC Censures Private Equity Firm for Failing to Disclose Relationships with Third-Party Service Provider

The SEC has censured a private equity firm for failing to disclose relationships and subsequent conflicts of interest between three of its principals and a third-party service provider. 
Read Full Story

Office of Compliance Inspections and Examinations Announces its "Multi-Branch Adviser Initiative

On December 12, 2016, the OCIE introduced its Mutli-Branch Adviser Initiative to identify risks of violating federal securities laws that result from investment advisers operating out of branch offices.
Read Full Story 

Jay Clayton Nominated for New Chairman of SEC

On January 4, 2017, President-elect Donald Trump nominated Jay Clayton to replace Mary Jo White as Chairman of the Securities and Exchange Commission.
Read Full Story

Former State Pension Director Sued For Steering Brokerage Business In Exchange For Gifts

The SEC has begun enforcement proceedings against the former Director of the NYSCRF for engaging in a "pay-to-play" arrangement with two registered representatives of broker-dealers.
Read Full Story 

SEC Alleges Private Equity Firm Breaches Fiduciary Duty

The SEC has alleged that New Silk Route Advisors, L.P. violated their Limited Partnership Agreement by making co-investments without approval of the funds' advisory boards.
Read Full Story 

SEC Chair White Announces Plan to Leave in January

On November 14,2016, SEC Chair Mary Jo White announced that she plans to leave the Commission at the end of the Obama Administration.
Read Full Story

SEC Alleges Unregistered Fund Manager Violates Fiduciary Duty

The SEC has alleged that two unregistered investment advisers breached their fiduciary duty while engaging in advisory activities.
Read Full Story

FINRA "Capital Acquisition Broker" Rules to Simplify Requirement for Certain Broker-Dealers

Effective April 14, 2017, certain broker-dealers will be able to minimize compliance burdens by registering as a "Capital Acquisition Broker" (CAB) if their brokerage activities are limited to those permitted by the CAB Rules.
Read Full Story 

FINRA "Capital Acquisition Broker"Rules to Simplify Requirements for Prviate Equity or Hedge Fund Managers to Register as Broker-Dealers

The SEC approved the "broker dealer-lite" rules, which could simplify compliance burdens for private equity and hedge fund managers that trigger broker dealer registration.
Read Full Story

The DOL Addresses the Fiduciary Rule

On October 27, the Department of Labor released a FAQ addressing the fiduciary rule with an emphasis on explaining the applicability of the Best Interest Contract Exemption.
Read Full Story

Whistleblower Rule Compliance Risk Alert

The SEC has warned advisers and broker-dealers that examination staff will evaluate agreements and related documents for provisions that impede whistleblowers from reporting violations of securities laws.
Read Full Story

SEC Amends Recordkeeping Rules and Reporting Rules for Separately Managed Accounts

The SEC amendments require advisers to maintain additional documents for recordkeeping and to report certain information based on the amount of RAUM attributable to their SMAs.
Read Full Story

SEC Adopts Rules to Modernize Investment Companies' Reporting, Enhance Liquidity Risk Management, and Permit Swing Pricing

The SEC's latest rules require registered investment companies, advisers, and sub-advisers to file new fund reports and to establish liquidity risk management programs while allowing mutual funds to utilize swing pricing.
Read Full Story 

SEC Penalizes Investment Advisers for False Performance Claims

The SEC announced penalties against 13 investment advisers for distributing false advertisements with inflated performance figures supplied by a sub-adviser.
Read Full Story

SEC Rule Enhances Information Reported by Investment Advisers

Amendments have been adopted to the Investment Adviser's Act to improve the quality of information provided to investors and the SEC.
Read Full Story

The Impact of Pay-To-Play During The 2016 Elections

Investment advisers that conduct business with government entities or plan to do so in the future should be aware of the potential business implications that could be triggered by the Pay-To-Play Rule.
Read Full Story

SEC Order Raises Requirement for "Qualified Client" Threshold

Due to inflation, the SEC has raised the net worth threshold from $2 million to $2.1 million. 
Read Full Story

SEC Proposes Rule for Enhanced Business Continuity Plans

Under the new rule, registered investment advisers would be required to construct and implement written business continuity and transition plans.
Read Full Story

SEC Enforcement Action for Failure to Protect Customer Data

The SEC recently responded to Morgan Stanley's failure to prevent a customer data breach.
Read Full Story

Department of Labor Finalizes its Conflict of Interest Rule

Seeking to protect retirement investors, the DOL finalized its sweeping conflict of interest rule.
Read Full Story

Exposure Draft of the Guidance Statement on Broadly Distributed Pooled Funds

The GIPS Technical Committee recently released for public comment a new Guidance Statement to address "Broadly Distributed Pooled Funds"
Read Full Story

OCIE 2016 Examiniation Priorities

The SEC announced the 2016 examination priorities for its Office of Compliance Inspections and Examinations.
Read Full Story

Fast Act Amends Privacy Notice Delivery Requirements for Certain Financial Institutions

Though the primary focus of Fast Act is transportation, it also includes several amendments to the federal securities laws.
Read Full Story

SEC Proposes Rule to Govern Derivatives Trading

The new rule seeks to impose additional regulations governing the sue of derivatives by registered investment companies and business development companies.
Read Full Story

$16.5 Million SEC Settlement for Use of Subadviser's Inflated Performance

The Adviser failed to conduct due diligence and did not have documentation to support the subadviser's calculations.
Read Full Story

SEC Evaluates Advisers and Funds that Outsource Their Chief Compliance Officers

In recently conducted sweep exams, the OCIE targeted outsourced CCOs, a practice often viewed to increase compliance risk due to the lack of internal compliance personnel to oversee the day-to-day activities of the firm.
Read Full Story

Update on the SEC's Proposed Changes to the Books and Records Rule

Two of the proposed amendments would, if adopted, require investment advisers to retain additional books and records.                                                                                                                                                   Read Full Story

Investment Adviser Settles with SEC for Failing to Adopt Cybersecurity Policies and Procedures

The SEC brought suit after the investment adviser failed to adopt proper cybersecurity policies and procedures prior to a breach that exposed personally identifiable information of nearly 100,000 individuals.
Read Full Story

The Financial Crimes Enforcement Network Proposes AML Rule for SEC-Registered Investment Advisers

Financial Crimes Enforcement Network submitted a proposed rule today that, if adopted, would require SEC-registered investment advisers to implement anti-money laundering (“AML”) programs.
Read Full Story

SEC Hot Topic: Compensation Received by Fund Advisory Personnel

The SEC released guidance in February 2015, reminding “mutual fund industry participants” that Section 17(e)(1) of the 1940 Act (“Advisers Act”) should be addressed expressly in funds’ compliance policies and procedures.
Read Full Story

SEC Proposes Rules to Enhance Information Reported by Investment Companies and Investment Advisers

On May 20th, the SEC proposed two new rules that, if finalized, would greatly enhance reporting requirements for investment advisers and investment companies.
Read Full Story

SEC Compliance Outreach Program

The SEC released the seminar schedule for its Compliance Outreach Program that is set to take place in six different cities in the upcoming months.
Read Full Story

Cybersecurity Guidance

The SEC released additional cybersecurity guidance, highlighting the importance of the issue and providing ways in which funds and advisers may address cybersecurity risks. Funds and advisers are encouraged to consider adding the following measures to their compliance programs.
Read Full Story

SEC Alerts Investors, Industry on Cybersecurity

The SEC released two publications regarding cybersecurity.
Read Full Story

OCIE 2015 Examination Priorities

The Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (“SEC”), along with Commissioners and other senior SEC staff, identified its 2015 examination priorities for investment advisers, broker-dealers, and transfer agents.
Read Full Story

Investment Manager Settles with SEC for $35 Million while Former CEO Remains under Investigation

The Securities Exchange Commission (“SEC”) filed an Enforcement Action against Investment Manager F-Squared for “defrauding investors through false performance advertising.”
Read Full Story

GIPS Requirement to Notify CFA Institute

Effective January 1, 2015, firms claiming Global Investment Performance Standards (“GIPS”) compliance must notify the CFA Institute on an annual basis.
Read Full Story

SEC Guidance on the Testimonial Rule and Social Media

The SEC’s Division of Investment Management provided guidance for investment advisers to help them determine whether public commentary on a social media site could be deemed to be a testimonial.
Read Full Story

SEC to focus on Cybersecurity

The SEC’s 2014 review of cybersecurity will be incorporated into its routine examinations of investment advisers and investment companies.
Read Full Story

National Exam Program 2014 Examination Priorities

The National Examination Program (“NEP”) has published its 2014 examination priorities to communicate with investors and registrants about areas that the staff perceives to have heightened risk.
Read Full Story

SEC Sanctions Firm for Inadequate Compliance Policies and Procedures

The SEC recently sanctioned and issued public administrative and cease-and-desist proceedings against Agamas Capital Management (“Agamas”) for not adopting and implementing adequate written compliance policies and procedures designed to prevent violations in three important areas of private fund management.
Read Full Story

SEC Sanctions Firms for Ignoring Compliance Problems

The SEC recently sanctioned investment advisory firms for not effectively responding to previously received warnings regarding compliance deficiencies.
Read Full Story

Disqualification of Felons and Other "Bad Actors" from Rule 506 Offerings

As mandated by the Dodd-Frank Act, the SEC’s bad actor disqualification rule relating to Rule 506 offerings becomes effective Monday, September 23, 2013.
Read Full Story

Current SEC Priorities Regarding Hedge Fund Managers

Norm Champ, Director of the Division of Investment Management, SEC Speech to the PLI Hedge Fund Management Conference, New York, NY, September 12, 2013.
Read Full Story

SEC Sanctions Portfolio Manager for Forging Documents and Misleading CCO

The SEC sanctioned a former portfolio manager, Carl Johns, for forging documents and misleading the adviser’s CCO in an attempt to hide the fact that he had not reported his personal trades.
Read Full Story

SEC Division of Investment Management Issues Guidance On Privately Offered Securities under the Custody Rule

On August 1, 2013, the SEC issued a Guidance Update related to investment adviser compliance with the custody rule with regard to maintaining nontransferable stock certificates or “certificated” LLC interests obtained in a private placement at a qualified custodian.
Read Full Story

Jobs Act Adopts Rule Eliminating the Prohibition Against General Solicitation of Private Offerings

New Rule 506(c) allows general solicitation and general advertising subject to the following conditions: • All purchasers of securities must be accredited investors; • Issuer takes reasonable steps to verify investors are accredited; and • All terms and conditions of Rule 501 and Rules 502(a) and 502(d) must be satisfied.
Read Full Story

SEC Adopts Identity Theft Rule

The SEC and the Commodity Futures Trading Commission (CFTC) have jointly agreed to adopt rules requiring broker-dealers, mutual funds, investment advisers, and other entities regulated by the SEC to adopt programs designed to detect and prevent identity theft.
Read Full Story

SEC Notice to EDGAR Form 13F Filers

The SEC has announced that Form 13F will be converting to an online form on Monday, April 29, 2013.
Read Full Story

SEC Issues Risk Alert and Investor Bulletin On Investment Adviser Custody Rule

On Monday, March 4, the SEC issued a Risk Alert about investment adviser compliance with the custody rule and an Investor Bulletin which covers the requirements of the rule.
Read Full Story

National Exam Program - Examination Priorities for 2013

The National Examination Program (“NEP”) has released its examination priorities for 2013. These priorities are consistent with the SEC’s goals of improving compliance, preventing fraud, communicating policy and monitoring firm-wide and systematic risk.
Read Full Story

SEC Examination Approach for 2013

In its Fiscal Year 2012 Agency Financial Report, the SEC outlined its examination approach for 2013. The Office of Compliance Inspections and Examinations (“OCIE”) will attempt to focus its efforts on advisers who present a higher risk to investors.
Read Full Story

UPDATE: Lawsuit Challenging New CFTC Regulations Dismissed

On Wednesday, December 12, U.S. District Judge Beryl Howell dismissed a lawsuit filed by the Investment Company Institute (ICI) and the U.S. Chamber of Commerce against the U.S. Commodity Futures Trading Commission (CFTC).
Read Full Story

Effects of CFTC Regulations

Effects of CFTC Regulations on Investment Advisers Who Purchase Commodity Funds For Their Clients
Read Full Story

Registered Investment Adviser Fined $200,000 for False Advertising

BTS Asset Management Inc. (“BTS”), a registered investment adviser based in Lexington, MA, agreed to pay $200,000 to settle charges related to advertisements for their high yield bond fund program.
Read Full Story

IARD Renewal Program

In order for an IA firm to maintain active registrations and/or notice filing statuses with jurisdictions/states and for investment adviser representatives to maintain active registration statuses, firms must pay applicable renewal fees annually.
Read Full Story

SEC Presence Exams For Newly Registered Advisers

Andrew Bowden, the new Deputy Director of the SEC Office of Compliance and Examinations (“OCIE”), announced his division’s goal to conduct presence exams through the National Exam Program (“NEP”) covering approximately 15% of newly registered advisers to private funds in the next 12-24 months.
Read Full Story

JOBS Act Provision for Private Funds - SEC Proposes Amendments

On August 29, 2012, the SEC proposed amendments to its rules to allow general solicitation and general advertising in securities offerings conducted pursuant to Rule 506 of Regulation D or Rule 144A under the Securities Act of 1933 (Securities Act).
Read Full Story

JOBS Act Provision for Private Funds - Public Comment Period

This Fairview Flash Report updates our previous Flash Reports which addressed the JOBS Act’s provision to remove the prohibitions against general solicitation and general advertisingfor securities offerings exempt from registration as long as all purchasers of such securities are accredited investors.
Read Full Story

Foreign Account Tax Compliance Act ("FATCA")

FATCA is a U.S. tax law that attempts to prevent U.S. taxpayers from avoiding U.S. income tax by investing in the U.S. through non-U.S. financial institutions and offshore investment vehicles.
Read Full Story

House Bill Would Allow SEC to Collect User Fees

On July 25, U.S. Representative Maxine Waters (D-CA) introduced the “Investment Adviser Examination and Improvement Act of 2012” which would allow the SEC to collect user fees to fund increased investment adviser examinations.
Read Full Story

UPDATE - Form PF

The SEC recently updated their Frequently Asked Questions on Form PF
Read Full Story

UPDATE - JOBS Act Provision for Private Funds Delayed

This Fairview Flash Report updates our April 10 Flash Report which addressed the removal of the prohibitions against general solicitation and general advertising for securities offerings exempt from registration under Rule 506 of Regulation D (under the Securities Act of 1933), as long as all purchasers of such securities are accredited investors.
Read Full Story

H.R. 5929 - Next Steps for Credit Availability Act

On June 8, 2012, the "Next Steps for Credit Availability Act" (H.R. 5929) was introduced in the House of Representatives. The bill would allow Business Development Companies (BDCs) to increase their capital pool which would provide more money to invest in start-up companies and small to mid-sized businesses.
Read Full Story

Compliance date extension for third party solicitor provisions of Pay-to-Play rule

The SEC extended the effective date for the ban on investment advisers paying third party solicitors who are not “regulated persons “to solicit government entities until June 2013. The original date for the ban to take effect was June 13, 2012.
Read Full Story

JUNE 6th HEARING ON INVESTMENT ADVISER SRO

The Committee on Financial Services debated the proposed Investment Adviser Oversight Act of 2012 (H.R. 4624), or more commonly referred to as the Bachus Bill, holding a discussion that included testimony from six industry executives.
Read Full Story

ERISA Section 408(b)(2) – Fee Disclosure effective July 1, 2012

This Rule requires investment advisers and other service providers to deliver disclosures to ERISA plans concerning their services and compensation, both direct and indirect, reasonably in advance of the date the advisory agreement is executed.
Read Full Story

JUNE 6th HEARING ON POSSIBLE SRO FOR INVESTMENT ADVISERS

The House Financial Services Committee will begin hearing testimony regarding the bill known as the "Investment Adviser Oversight Act of 2012" on June 6, 2012. The bill proposes adding regulatory oversight of investment advisers by a selfregulatory organization (SRO) such as FINRA.
Read Full Story

Speech by SEC Staff: What SEC Registration Means for Hedge FundAdvisers

By Norm Champ
Deputy Director, Office of Compliance Inspections and Examinations
U.S. Securities and Exchange Commission
Read Full Story

Commodity Futures Trading Commission

On February 9, the Commodity Futures Trading Commission (CFTC) adopted by a vote of 4 to 1 final rules amending its Part 4 regulations governing commodity pool operators (CPOs) and commodity trading advisors (CTAs).
Read Full Story

Form PF

Any investment adviser who is registered or required to register with the SEC that advises one or more private funds with greater than $150 million in regulatory assets, must file a Form PF with the SEC. This is a confidential form filing.
Read Full Story

Form ADV

Any investment adviser who is registered or required to register with the SEC will need to complete the new Form ADV Part 1 on IARD
Read Full Story

SEC RISK ALERT ON UNAUTHORIZED TRADING AND SIMILAR ACTIVITIES

Read Full Story

Jumpstart Our Business Startups Act (the “JOBS Act”).

On April 5, President Obama signed the Jumpstart Our Business Startups Act (the “JOBS Act”). One of the provisions of the JOBS Act directs the Securities and Exchange Commission (the “SEC”) to remove the prohibitions against general solicitation and general advertising for securities offerings exempt from registration under Rule 506 of Regulation D (under the Securities Act of 1933), as long as all purchasers of such securities are accredited investors.
Read Full Story

QUALIFIED CLIENT DEFINITION

The SEC announced it is increasing the net worth requirement for investors who pay performance fees by excluding the value of the investor’s home from the investor’s net worth calculation.
Read Full Story