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Written by:  Jay B. Gould and Jessica Brown

On July 10, 2013, the Securities and Exchange Commission (“SEC”) voted to lift the ban on general solicitation and advertising by private funds (and other private company issuers) as mandated by Congress in the Jumpstart Our Business Startups Act (“JOBS Act”). In addition to lifting the ban on general solicitation, the SEC approved a disqualification rule that will prospectively prohibit any felon or “bad actor” from relying on Rule 506 exemptions. Finally, the SEC voted to propose amendments to the current private offering rules.

I.          New Rule 506(c) 

Summary

Rule 506(c), as adopted by the SEC, permits private issuers to use general solicitation and general advertising when making a securities offering, provided the issuer only sells to accredited investors.[1] Issuers must take affirmative and reasonable steps to verify that each investor is accredited under the Rule 501 definition, and cannot simply rely upon a representation from the investor.

Verification Rule

The burden now shifts to private fund managers to determine “reasonableness” when making a determination of an investor’s accredited status. In response to comments it received, the SEC has provided some ideas an issuer can consider when determining its verification procedures. The non-exclusive, non-required verification methods published by the SEC include: (i) review federal tax forms, (ii) confirm net worth through documentation, or (iii) obtain written confirmation from a registered broker-dealer, registered investment adviser, licensed attorney in good standing, or registered CPA.  Accordingly, private fund managers will be able to rely upon certain third parties to make a determination of accreditation.

Current Rule 506 Exemptions

Rule 506(c) does not modify or repeal any of the current Rule 506 exemptions and issuers may still rely on those exemptions as written.   Therefore, private fund managers that do not see the value in advertising or soliciting to the public, or find the conditions of the new rules too onerous, may continue under the current private offering regime and will remain subject to all of the same restrictions on communications with the public to which they are currently subject. 

Form D

The current Form D filing document will be amended to include a “check-the-box” option to designate if the issuer is relying on the new Rule 506(c) in its present offering.  For those private funds and other issuers that do intend to generally advertise, the SEC has proposed that a Form D would need to be filed with the SEC 15 days in advance of the offering and again within 30 days after the offering closes.  It is proposed that an issuer that fails to make these filings would be prohibited from using the public advertising rules in the future.

II.        Rule 144A

Similar to the changes to Rule 506, under the new rules, securities sold pursuant to Rule 144A may be “offered” to investors other than qualified institutional buyers, because information about such offerings would be made public by way of general advertising, but the securities may only be sold to investors the seller reasonably believes to be qualified institutional buyers.[2]

III.       Felons and “Bad Actors” Disqualification

The SEC unanimously adopted a rule that disqualifies certain felons and “bad actors” from relying on any Rule 506 exemption.[3] This disqualification will be effective sixty days after the publication of the final rules in the Federal Register. 

The SEC identified a number of events that would disqualify an issuer from relying on Rule 506, such as securities-related criminal convictions, court injunctions and restraining orders, final orders from regulators and agencies, certain SEC disciplinary orders, anti-fraud or registration-related cease-and-desist orders from the SEC, SEC stop orders, suspension or expulsion from membership or association with a self-regulated organization, or recent U.S. Postal Service false representation orders. 

However, much to the consternation of the lone dissenting Commissioner Luis Aguilar, this provision will not bar persons who have committed financial and other crimes in the past.  It will only bar such bad actors on a going forward basis. Presumably, the fact that a principal of an issuer is a convicted felon would be a material fact that would be required to appear in the offering materials of the issuer, and for private funds, this information would, in most cases, get picked up in the Form ADV of the fund manager.

IV.       What Happens Next

Timing

The effective date of Rule 506(c) and the disqualification rule is 60 days following the date the rule is published in the Federal Register. For an ongoing offering under Rule 506 that began before the effective date of Rule 506(c), the issuer may elect to continue the offering after the effective date in accordance with the requirements of either the current Regulation D rule or new Rule 506(c), which permits general solicitation and advertising.  Accordingly, if an issuer chooses to continue its offering under Rule 506(c), any general solicitations that take place after the effective date, will not impact the exempt status of offers and sales that took place prior to the effective date in reliance on Rule 506(b).

What Funds Can Do Now

After the effective date of Rule 506(c), private funds that are not otherwise disqualified from using the Rule 506 exemptions may begin advertising and soliciting generally. An issuer that chooses to advertise or solicit generally must put policies and procedures in place to ensure that reasonable steps are taken to verify that each purchaser is accredited and that no sales are made to non-accredited investors.

Limitations, CFTC Considerations and Fund Advertising

Since February 2012, when the Commodity Futures Trading Commission (“CFTC”) rescinded Rule 4.13(a)(4), most private funds have relied upon the de minimus exemption of Rule 4.13(a)(3) in order to be exempt from CFTC registration. Other funds that trade futures or other instruments that are subject to CFTC oversight above the de minimus threshold, avail themselves of the “registration lite” exemption in Rule 4.7, pursuant to which all fund investors must be “qualified eligible persons.”  However, both of these exemptions require that the fund securities must be offered and sold without any marketing to the public in the United States.  Therefore, until the CFTC acts to amend these exemptive rules on which many private fund managers rely, none of these private funds will be able to use the general solicitation provisions of new Rule 506(c).  The Managed Funds Association submitted an outline of proposed rule amendments to the CFTC that would harmonize the CFTC rules with the SEC’s JOBS Act rules, but it is uncertain when the CFTC will act on this matter.

For a discussion of these provisions, see this discussion on Bloomberg. 

Proposed Amendments to Regulation D, Form D and Rule 156

In connection with the approval of Rule 506(c), the SEC proposed amendments to Regulation D, Form D and Rule 156 under the Securities Act. These proposed “investor protection” amendments are intended to enhance the SEC’s ability to evaluate market changes, the nature of advertising used by issuers, the steps taken by the issuer to verify that all investors were accredited and the intended use of the proceeds of the sale. It is likely that these provisions will soon become part of the new Form D and be applicable to private fund managers that advertise or solicit to the public. 

Finally, fund managers and their compliance officers should familiarize themselves with the requirements of Rule 156, as it appears likely that this anti-fraud rule will soon apply to the sales literature and advertising produced by hedge fund and private equity funds.

Questions regarding new Rule 506(c), the CFTC rules, Rule 156 and other implications regarding this recent SEC action should be directed to your Pillsbury attorney contact.

 

[1] Rule 501 of Regulation D defines an individual as an “accredited investor” if they have individual net worth, or joint net worth with the person’s spouse, in excess of $1 million at the time of the purchase, excluding the value of the primary residence of such person, or with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

[2] Rule 144A defines “qualified institutional buyers” as certain institutions that own and invest at least $100 million in securities of issuers that are unaffiliated with the institutions, banks and financial institutions must also have a net worth in excess of $25 million. A registered broker-dealer qualifies if it owns and invests on a discretionary basis over $10 million in securities of issuers that are unaffiliated with the broker-dealer. 

[3] An issuer will be disqualified from relying on Rule 506 exemptions if any “covered person” has had a “disqualifying event.” The rule defines “covered persons” as: (i) the issuer, (ii) the issuer’s predecessors and affiliated issuers, (iii) directors and certain officers, general partners and managing members of the issuer, (iv) 20 percent beneficial owners of the issuer, (v) promoters, (vi) investment managers and principals of pooled investment funds, and (vii) persons compensated for soliciting investors as well as the general partners, directors, officers, and managing members of any compensated solicitor.

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Written by: G. Derek Andreson

The U.S. Securities and Exchange Commission (“SEC”) is poised to modify its “no-admit, no-deny” policy to seek more admissions of wrongdoing from defendants as a condition of settlement in enforcement cases. The change comes on the heels of recent criticism of the policy from two federal judges and a U.S. Senator and would result in potentially far-reaching consequences for companies, their directors, officers, and employees.

The Proposed Policy Change
At the Wall Street Journal CFO Network’s Annual Meeting on Tuesday, June 18, SEC Chairman Mary Jo White announced her intention to require more admissions of wrongdoing from defendants in the settlement of enforcement actions. Prior to this announcement, the SEC only required such admissions in a narrow sub-set of cases in which parties admitted certain facts as part of a guilty plea or other criminal or regulatory agreement. Such an approach would represent a radical departure from the SEC’s longstanding no-admit, no-deny policy, under which defendants settle cases without admitting or denying wrongdoing. Chairman White emphasized that the no-admit, no-deny policy will still be used in the “majority” of cases and that “having ‘no-admit, no-deny’ settlement protocols in your arsenal as a civil enforcement agency [is] critically important to maintain.”1

 

Details are still forthcoming on the scope of the proposed changes to the SEC policy, which will require approval from a majority of the five SEC commissioners. However, Chairman White presumably would not have announced her intention to depart from tradition and require admissions of wrongdoing in certain settlements if such a change lacked majority support from the other Commissioners. In a memo written to the Enforcement Division staff, the Division’s Co-Directors, George Canellos and Andrew Ceresney, have suggested that the SEC would only require admissions of wrongdoing where it would be in the public interest. According to the memo, this may include “misconduct that harmed large numbers of investors or placed investors or the market at risk of potentially serious harm; where admissions might safeguard against risks posed by the defendant to the investing public, particularly when the defendant engaged in egregious intentional misconduct; or when the defendant engaged in unlawful obstruction of the Commission’s investigative processes.”2

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Read this article and additional publications at pillsburylaw.com/publications-and-presentations.

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Written by:  Jay B. Gould

On June 21, 2013, the Securities and Exchange Commission (“SEC”) entered a cease and desist order (technically called an “Order Instituting Administrative and Cease-and-Desist Proceeding”) against the former President of Stanford Capital Management, Jason A. D’Amato.  You may read the full SEC Order here.  Because this case is part of the broader case of former knight turned Ponzi purveyor, Allen Stanford, it would be easy to dismiss this order as an outlier and not readily applicable to other investment advisers and fund managers.  That would be a mistake.  The D’Amato Order provides useful insight into the SEC’s concerns with the use and misuse of hypothetical and back tested performance information as well as certain compliance failings that all fund manager should understand and appreciate.

To briefly summarize the facts, in 2000, Stanford began offering a mutual fund allocation program to its advisory clients.  D’Amato was hired in 2003 as an assistant analyst to track performance and create personalized pitchbooks for use by Stanford financial advisers in one-on-one presentations with prospective clients.  D’Amato calculated the performance returns for each strategy by back testing then existing allocations in each strategy against historical market data for the previous five years (i.e., if a client held a particular allocation of mutual funds from 2000 through September 2004, the pitchbook showed how it would have performed).  The pitch materials all contained charts showing the performance of each strategy dating back to 2000 with charts variously labeled “Hypothetical Performance,” “Hypothetical Historical Performance,” or “Model Performance.”  Amazingly enough, the back tested performance outperformed the index as well as actual performance in every strategy and, in some cases, by substantial margins.  In fact, the numbers were so skewed that the financial advisers who had to use these materials in front of prospective clients began complaining to Stanford management because none of their clients had ever achieved the returns disclosed on the performance charts.  So, Stanford hired an outside consultant to come in and verify the numbers, or not. 

For at least 2005 and 2006, the consultant concluded that: (i) actual returns earned by Stanford clients were, in most cases, hundreds of basis points lower than the returns published in the pitchbooks; and (ii) D’Amato and his team of analysts did not keep sufficient records to show contemporaneous changes in each of the Stanford strategies prior to 2005, so the consultant could not verify the advertised performance numbers before 2005.  But no problem, even though performance data for 2000 through 2004 could not be verified, Stanford management chose to continue using those figures in the pitchbooks using terms like “historical performance” to describe numbers for which no backup existed.  Additionally, the unaudited and unverified “data” was blended with other audited and composite data from different time periods and then published alongside actual performance.  You might think that crafting appropriate disclosures or disclaimers that would make this potpourri of numbers understandable to clients would be difficult or even impossible.  Apparently, so did Stanford because they decided not to include any.    

During this time, D’Amato began holding himself out to coworkers, clients, prospective clients, financial advisers, and others as a Chartered Financial Analyst (“CFA”).  Sadly, D’Amato was not, and had never been, a CFA and, in fact, he had failed the CFA Level I exam the first and only time that he took it.  Not to be deterred by minor details, D’Amato used the CFA designation in his e-mail signature block on thousands of e-mails and on his business cards.  He also fabricated an e-mail that he purportedly received from the CFA Institute that congratulated him on passing the Level III CFA exam and on achieving charterholder status.  D’Amato then passed that e-mail to Stanford’s human resources department, which in turn passed it along to Stanford’s compliance department which in turn threw him a party, or at least did not verify the authenticity of the “CFA” e-mail.  And what does this behavior get you in the near term?  Sir Allen Stanford was so impressed by how carefully D’Amato polished up the handle, that he was promoted to President of the Stanford investment adviser.  Simply by using totally bogus performance numbers and misrepresenting his qualifications and background, D’Amato increased assets under management from less that $10 million in 2004 to over $1.2 billion by the end of 2008, generating $25 million in management fees in 2007 and 2008.  And then Sir Allen’s Ponzi scheme came crashing down, taking D’Amato in its wake.

For fund managers and investment advisers, there are a number of takeaways from the D’Amato case.  First, when back tested or hypothetical “performance” is used in marketing materials, full and accurate disclosure must be made to investors and potential investors.  The methodology used must be sound and records must be kept.  Similarly, with respect to actual performance, calculations must be accurate and verifiable and must be presented in a context that does not make otherwise accurate information misleading in any material way.  Fund managers, in particular, should not dismiss the D’Amato case because it occurred in the context of mutual funds and more “retail” type investors.  The SEC and state regulators are willing to go back and look at past marketing presentations for inflated or inaccurate claims, all of which are required to kept as part of an adviser’s books and records.

For compliance personnel, remember, you have personal liability under Rule 206(4)-7 under the Investment Advisers Act of 1940 for the proper administration of the firm’s compliance policies and procedures.  Verifying past educational accomplishments, and confirming duties, titles, and responsibilities at former employers of advisory personnel is a basic function of the compliance role.  Even if the employee is the president of the organization, and especially if this particular executive officer ordered or condoned the use of misleading marketing materials after other employees complained about them.

The consequences to D’Amato for his role in this scheme is also worth noting.  D’Amato was fined $50,000, but more importantly, he was barred from the industry for five years and must apply to the SEC for the ability to associate with an investment adviser, broker dealer or any other regulated entity at the conclusion of that bar, should he believe that he has a future in the securities business. 

 

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Written by: Jay B. Gould

The SEC recently proposed rules to reform the way money market funds, which currently have over $2.9 trillion in assets, operate in order to make them less susceptible to large redemptions that could harm investors.  Specifically, the SEC proposed two alternatives that could be adopted alone or in combination.  The first alternative would require a floating net asset value for prime institutional money market funds.  The floating NAV is intended to address the heightened incentive for shareholders that have to redeem shares in times of high volatility and to improve the transparency of money market fund risks through more visible valuation and pricing methods.  The second alternative would allow the use of liquidity fees and redemption gates during times of high volatility. 

The proposed rules would also (i) require money market funds to provide additional disclosures pertaining to their levels of liquid assets, certain material events and sponsor support; (ii) eliminate the 60-day delay on public access to the information filed on Form N-MFP regarding portfolio holdings; (iii) amend Form PF to improve private liquidity fund reporting; (iv) strengthen the diversification requirements of a money market fund’s portfolio by requiring that money market funds and their affiliates aggregate their holdings for purposes of complying with the 5% concentration limit, removing the “25% basket” and requiring money market funds to aggregate all of the asset-backed securities vehicles sponsored by the same entity for purposes of the 10% guarantor diversification limit; and (v) enhance the stress testing requirements for money market funds adopted by the SEC in 2010.     

The SEC press release regarding the proposed rule can be found here and the full text of the proposed rule can be found here. 

 

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Written by Cindy V. Schlaefer, Gabriella A. Lombardi and Laura C. Hurtado

Rule 10b5-1 trading plans are in the limelight due to investigations initiated by U.S. Attorney’s Offices and the SEC into possible abuses by corporate executives of such plans. Now, more than ever, companies and their boards of directors should review and strengthen their insider trading policies concerning Rule 10b5-1 trading plans.

Rule 10b5-1 trading plans are no stranger to controversy. First introduced in 2000 by the Securities and Exchange Commission (SEC), Rule 10b5-1 trading plans permit a corporate insider to adopt a plan of acquisition or disposition of his or her company’s stock when not in possession of material nonpublic information so that trades may be executed by a broker at predetermined times regardless of whether the insider then possesses material nonpublic information.

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This article has been posted to the Pillsbury website.  To view additional publications, please visit https://www.pillsburylaw.com/publications.

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On April 8, 2013, we reviewed a recent speech by David Blass, the Chief Counsel of the Division of Trading and Markets of the Securities and Exchange Commission (the “SEC”), in which Mr. Blass provided his views on whether certain investment fund managers might be operating in a way that would require registration as a broker dealer.  For hedge fund managers, the problem typically arises in the context of paying internal sales people based on the amount of capital raised.  As we noted, the widespread misreading or abuse of Rule 3a4-1, the issuer’s exemption safe harbor on which so many hedge fund managers rely, is now clearly on the SEC’s radar.

But there are other ways to become entangled in broker dealer registration requirements that many private equity funds (and some hedge funds) will also need to consider.  The SEC staff is aware that advisers to some private funds, such as managers of private equity funds executing a leverage buyout strategy, may collect fees other than advisory fees, some of which look suspiciously like brokerage commissions.  It is not uncommon for a fund manager to direct the payment of fees by a portfolio company of the fund to one of its affiliates in connection with the acquisition, disposition (including an initial public offering), or recapitalization of the portfolio company.  These fees are often described as compensating the fund manager or its affiliated company, or personnel for “investment banking activity,” including negotiating transactions, identifying and soliciting purchasers or sellers of the securities of the company, or structuring transactions.  These are typical investment banking activities for which registration as a broker dealer is required.

Perhaps through its presence exams, the SEC staff recognizes that the practice of charging these transaction fees is fairly common among certain private equity fund managers.  Blass suggested that if the payment of these investment banking type fees were used to offset the management fee, then a valid argument could be made that no separate brokerage compensation was generated.  However, the industry argument that the receipt of such fees by the general partner of the fund should be viewed as the same person as the fund, so there are no transactions for the account of others was not an argument that the SEC staff appeared ready to endorse.  As long as the fee is paid to someone other than the fund for the types of activities described above, then the general partner or its affiliate would need to go through the analysis as to why broker dealer registration is not required.  The private equity fund bar has also advanced the policy argument that requiring private equity fund managers to register as broker dealers serves no useful purpose.  This policy argument that advocates the position that the SEC should exempt certain firms and not others for the same conduct, as attractive as it might be for managers of private equity funds, is a total non-starter from the regulator’s perspective.  The SEC staff will remain fixated on the type of activity and the fees generated from that activity when attempting to determine whether registration is required.

Particularly among private equity fund managers, many of which have not had a history of being a regulated entity, this violation of the broker dealer registration requirement is not viewed as a serious matter because “everyone else is doing it.”  But the SEC is putting private equity on notice that this is an area that the staff will focus on in examinations and will eventually bring enforcement action.  In addition to being subject to sanctions by the SEC, another possible consequence of acting as an unregistered broker-dealer is the potential right to rescission by investors.  A transaction that is intermediated by an inappropriately unregistered broker-dealer could potentially be rendered void.  A purchaser of securities would typically seek to void a transaction if the price had moved against him, leaving the fund manager scrambling to make up the difference between the sales price and the value at rescission.   Private equity fund managers and those hedge fund managers that conduct similar activities should give greater attention to this issue for which the SEC staff has provided fair warning.

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This article was published by CounselWorks and is reprinted here with permission.

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April 12, 2013

Dear Friends,

Yesterday, the SEC testified before Congress providing an update on the implementation of the JOBS Act. Regarding the implementation of the lift on the prohibition against general solicitation, the SEC said its staff are “developing recommendations for the Commission’s consideration as how to best move forward.”

The JOBS Act passed in April 2012 and a rule for this provision has yet to be finalized.  “The longer we wait for action by the regulators, the more our engines of economic growth will continue to simply tread water, or worse yet starve, for lack of opportunity,” said Congressman David Schweikert (R-Ariz), a participant in CounselWorks’ 2012 SummerTime Summit and Chairman of the House Small Business subcommittee on regulations.

Please click here for a link to the SEC’s testimony and click here for a link to the transcripts and video of the full hearing.

Please feel free to contact us with any questions at (212) 867-0200 or e-mail us at info@counselworksllc.com

Thank you,

CounselWorks

 

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In a speech before the American Bar Association’s Trading and Markets Subcommittee on April 5, 2013, David Blass, the Chief Counsel of the Division of Markets and Trading, put hedge fund managers and private equity fund managers on notice that they may be engaged in unregistered (and therefore, unlawful) broker dealer activities as a result of the manner by which hedge fund managers compensate their personnel and, in the case of private equity fund managers, the receipt of investment banking fees with respect to their portfolio companies.  The good news is that Mr. Blass indicated that the Staff of the Securities and Exchange Commission (the “SEC”) is willing to work with the industry to come up with an exemption from broker dealer registration for private fund managers that would allow some relief from the prohibitions against certain sales activities and compensation arrangements regarding the sales of private fund securities.  This post will address only the sales compensation activities of hedge funds with an explanation of the private equity investment banking fee discussion to follow.

Mr. Blass indicated that he believed that private fund advisers may not be fully aware of all of the activities that could be viewed as soliciting securities transactions, or the implications of compensation methods that are transaction-based that would give rise to the requirement to register as a broker dealer.

Mr. Blass provided several examples that fund managers should consider to help determine whether a person is acting as a broker-dealer:

How does the adviser solicit and retain investors?  Thought should be given regarding the duties and responsibilities of personnel performing such solicitation or marketing efforts. This is an important consideration because a dedicated sales force of internal employees working in a “marketing” department may strongly indicate that they are in the business of effecting transactions in the private fund, regardless of how the personnel are compensated.

Do employees who solicit investors have other responsibilities?  The implication of this point is that if an employee’s primary responsibility is to solicit investors, the employee may be engaged in a broker dealer activity irrespective of whether other duties are also performed.

How are personnel who solicit investors for a private fund compensated?  Do those individuals receive bonuses or other types of compensation that is linked to successful investments?  A critical element to determining whether one is required to register as a broker-dealer is the existence of transaction-based compensation. This implies that bonuses tied to capital raising success would likely give rise to a requirement for such individuals to register as broker dealers.

Does the fund manager charge a transaction fee in connection with a securities transaction?  In addition to considering compensation of employees, advisers also need to consider the fees they charge and in what way, if any, they are linked to a security transaction.  This point is aimed more at the investment banking type fees that a private equity fund might generate, but it would also be relevant in the context of direct lending funds or other types of funds that generate income outside of the increase or decrease of securities’ prices.

Mr. Blass also addressed the use or misuse of Rule 3a4-1, the so-called “issuer exemption.”  That exemption provides a nonexclusive safe harbor under which associated persons of certain issuers can participate in the sale of an issuer’s securities in certain limited circumstances without being considered a broker.  Mr. Blass stated his mistaken belief that most private fund managers do not rely on Rule 3a4-1, which, in fact, they do.  Blass suggests that private fund managers do not rely on this rule because in order to do so, a person must satisfy one of three conditions to be exempt from broker-dealer registration:

  • the person limits the offering and selling of the issuer’s securities only to broker-dealers and other specified types of financial institutions;
  • the person performs substantial duties for the issuer other than in connection with transactions in securities, was not a broker-dealer or an associated person of a broker-dealer within the preceding 12 months, and does not participate in selling an offering of securities for any issuer more than once every 12 months; or
  • the person limits activities to delivering written communication by means that do not involve oral solicitation by the associated person of a potential purchaser.

Mr. Blass rightly points out that it would be difficult for private fund advisers to fall within these conditions.  That, however, has not stopped most private fund managers from relying on some interpretation of the “issuer’s exemption” no matter how attenuated the adherence to the conditions might be.

Although Mr. Blass indicated a willingness to work with the industry to fashion an exemption from broker dealer registration that is specifically tailored to private fund sales, he also reminded the audience that the SEC is quite willing to take enforcement action against private funds that employ unregistered brokers.  Last month, the SEC settled charges in connection with alleged unregistered brokerage activities against Ranieri Partners, a former senior executive of Ranieri Partners, and an independent consultant hired by Ranieri Partners.  The SEC’s order stated (whether or not supported by the facts) that Ranieri Partners paid transaction-based fees to the consultant, who was not registered as a broker, for the purpose of actively soliciting investors for private fund investments. This case demonstrates that there are serious consequences for acting as an unregistered broker, even where there are no allegations of fraud.  The SEC believes that a fund manager’s willingness to ignore the rules or interpret the rules to accommodate their activities can be a strong indicator of other potential misconduct, especially where the unregistered broker-dealer comes into possession of funds and securities.

Private fund managers are encouraged to consider this statement and review their sales and compensation arrangements accordingly.

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REGISTER NOW!

Pillsbury and the California Hedge Fund Association invite you to join us on Thursday, April 25, 2013 for an educational program featuring Ms. Jan Lynn Owen, the Commissioner of the California Department of Corporations (DOC) and Person to be Announced from the U.S. Securities and Exchange Commission.

The Commissioner and her staff will discuss the new investment adviser registration rules that were recently adopted by the DOC, including the “exempt reporting adviser” provisions, the interplay between the DOC rules and those of the post-Dodd-Frank rules of the Securities and Exchange Commission.

This program will provide startup hedge fund managers and new investment advisers with the information they need to navigate the registration process, regulatory requirements, and examination focus of the DOC and the SEC, including:

  • Eligibility for reliance on the “exempt reporting adviser” provisions and what that means in the registration process
  • What the DOC and SEC expect to see in hedge fund manager and investment adviser compliance programs
  • Examination and enforcement by the DOC and the SEC and coordination efforts between the two agencies
  • Tax planning and compliance for fund managers at the state, local and federal levels
  • New DOC and SEC rules in the concept or proposal stage aimed at investment advisers

Date & Time
4/25/2013

3:30 pm – 4:00 pm PT
Registration

4:00 pm – 4:30 pm PT
Keynote: Jan Lynn Owen

4:30 pm – 5:45 pm PT
Panel Discussion

5:45 pm – 7:30 pm PT
Reception

Location
Pillsbury’s San Francisco Office
Four Embarcadero Center
22nd Floor
San Francisco, CA 94111

Event Contact
Juliana Curmi 

Featured Speaker
Jan Lynn Owen, Commissioner, California Department of Corporations

Host and Moderator
Jay B. Gould, Partner, Pillsbury

Additional Speakers
Jerry Twomey, Deputy Commissioner, Division of Securities Regulation, California Department of Corporations

Doug Bramhall, Tax Managing Director, KPMG

Kristin A. Snyder, Associate Regional Director–Examinations, Securities and Exchange Commission, San Francisco Regional Office