Doug Cornelius on compliance for private equity real estate
When the Securities and Exchange Commission brings charges against a real estate company, it catches my eye. The SEC accused Joshua Schuster and Schuster Enterprises LLC (d/b/a Silverback) of misleading investors and misappropriating some of that invested capital. Of course, this is just the SEC’s side of the case and Mr. Schuster has not had … Read more »
Back in 2019 (before the pandemic) the Securities and Exchange Commission, brought a case against Commonwealth Equity Services, LLC (d/b/a Commonwealth Financial Network), a registered investment adviser and broker-dealer, with failing to disclose material conflicts of interest related to revenue sharing Commonwealth received for certain client investments. The SEC prevailed in federal court, with an … Read more »
On April 4, 2025, the SEC’s Division of Corporation Finance issued a statement in an effort to provide greater clarity to stablecoins under the U.S. securities laws. The statement concludes that stable coins that are US Dollar-backed, fully reserved, and non-yield-meet do not involve the offer or sale of securities. Therefore these “Covered Stablecoins” do not … Read more »
Sliding in at the end of the deadline, FinCEN released an interim final rule that removes the beneficial ownership reporting requirements for U.S. companies and limits it to only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction. The … Read more »
On March 19, the Division of Investment Management published an updated FAQ on the Marketing Rule addressing extracted performance. The January 2023 Marketing Rule FAQ on extracted performance has been substantially revised. The old FAQ had required the calculation of new return for the performance shown in a case study for a private fund. I … Read more »
There has been an uptick in more sophisticated fraudsters posing as registered representatives, investment advisers and their firms. In December, the SEC charged three individuals with impersonating financial professionals in fraud scheme targeting retail investors. With the money stolen does the victim have a case against the legitimate firm? Mark Frank Harding fell victim to … Read more »
The definition of “accredited investor” is at the nexus of the Securities and Exchange Commission’s missions: (1) to protect investors, (2) to maintain fair, orderly, and efficient markets, and (3) to facilitate capital formation. If you’re an accredited investor you have access to private offerings. That enables capital formation. Private offerings are not subject to … Read more »
One of the main pillars of compliance with investment advisers and investment funds is to stay within the guardrails. If you’ve told your investors you’re doing a particular type of investing, do that type. If you’ve told your investors that you won’t do something, don’t do it. Obviously, if you’ve told your fund investors that … Read more »
Following the FinCEN announcement that it was going to ignore the Corporate Transparency Act requirement, the law suffered another loss in a Michigan case. This time the loss was due to a different part of the consitution. Judge Jonker in the Western District Court of Michigan in the Small Business Association of Michigan v. Janet … Read more »
Maybe? On Sunday the Treasury Department announced that there would be no future enforcement of the Corporate Transparency Act against US companies. The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under … Read more »