Year: 2011

Report on SEC Referrals to Enforcement

For a registered investment adviser, it’s okay to have the SEC’s Office of Compliance Inspections and Examinations visit you. It’s a big problem if the enforcement division visit. OCIE will issue a deficiency letter asking you to fix any deficiencies it finds. If your noncompliance is serious or the examiners think investor funds are at risk, OCIE can refer the case to the enforcement division.

We get to see how well this referral process works as part of a recent Inspector General Report: OCIE Regional Offices’ Referrals to Enforcement (.pdf)

This report was triggered by the fallout from the Stanford case. “The OIG found that the SEC’s Fort Worth regional office had been aware since 1997 that Robert Allen Stanford was likely operating a Ponzi scheme. The investigation also discovered that after a series of OCIE examinations of Stanford Group Company (Stanford’s registered investment advisor) in which each examination concluded that the likelihood of a Ponzi scheme or similar fraud existed, the SEC’s Fort Worth Enforcement unit did not take significant action to investigate or stop such expected fraud until late 2005.” The allegation against the Fort Worth enforcement office is that they were being judged on the number of cases they won. They wanted to stay away from Stanford because is would consume lots of resources and had an uncertain outcome. The OIG claims there was perception that they only wanted “quick-hot” or “slam-dunk”cases.

The OIG report’s objective was to determine “whether and to what extent OCIE examiners were frustrated in matters other than Stanford where Enforcement did not pursue cases identified by examiners in the SEC regional offices.”

One highlight was that the OCIE staff identified thethe SEC’s Asset Management Unit as having significantly assisted with the acceptance rate of referrals.

They also highlight the the different missions and focuses of OCIE and Enforcement: “OCIE focuses its efforts on assessing whether SEC registrants are in compliance with securities laws, while Enforcement’s mission is to protect investors and the markets by investigating potential violations of securities laws and litigating the SEC’s enforcement actions.”

The SEC’s Asset Management Unit

Yesterday, Bruce Carton of Securities Docket hosted a webinar: The SEC’s Asset Management Unit and Strategies for Avoiding Trouble in 2011 and Beyond. He managed to get Bruce Karpati, the co-head of the SEC’s Asset Management unit, to participate. Also joining the presentation were John Reed Stark, Managing Director of Stroz Friedberg and former Chief, SEC Office of Internet Enforcement; and Bradley J. Bondi, a litigation partner at Cadwalader, Wickersham & Taft LLP and former counsel to SEC Commissioners Troy Paredes and Paul Atkins for enforcement matters.

The SEC’s Asset Management Unit focuses on investment advisers and investment companies. If you run a private fund, this unit is keeping an eye on you.

You can see replay of the presentation yourself, but here are the things that caught my attention:

Private fund registration under Dodd-Frank is very important to his unit. They work closely with OCIE. They are looking forward to the new data that will come from fund registration and Form PF.

They are especially concerned about the level of transparency, even for private funds, and the information given even to institutional investors.

Weak and fraudulent valuation processes are high on his list of concerns. In particular, he is concerned about private funds with an incentive to overvalue assets. He mentioned the Palisades funds use of side pockets that lead to an enforcement action. He also mentioned the

Another highlight was “investment drift.” Make sure that your investment activity is not wandering from the areas that you told your investors you were going.

Of course, insider trading and expert networks are taking up a fair amount of his unit’s time and energy.

He raised the “suspicious performance investigation” where the SEC is looking at funds that have consistently outperformed market. The leading example is the Madoff scandal. Madoff’s outlying performance should have been a red flag for investors. The SEC wants to spot these kind of problems.

He is looking at adviser background misrepresentation. It sounds like they are ready to bring fraud charges for misstating educational background and experience.

Stark praised the unit. As a lawyer who would be on the opposite side of the table he would prefer someone with specialized knowledge of the investment management industry than a generalist enforcement lawyer.

Stark focused on the In the Matter of AXA Rosenberg Group LLC, et al.(Feb.2011) involving a flaw in the computer model for a quantitative fund. The model’s algorithm had a flaw that resulted in under-performance. This is tough one for compliance because the compliance geeks are rarely in the room with the math geeks.

Bondi laid out a series of compliance policies and issues that new investment adviser registrants should be concerned about.  He spent a great deal of time focusing on privacy and security breaches. (Maybe too much for the focus of this presentation.)

Sources:

participants in April 5 Webcast, Karpati, Stark and Bondi

Pay for Performance from Future Fund Flows

Michael Weisbach Professor and Ralph W. Kurtz Chair in Finance at The Ohio State University, and his colleagues, Ji-Woong Chung, Berk A. Sensoy and Léa H. Stern, are looking a the effect of the pay for performance at private equity funds. One hand, there is the current income from management fees and a percentage of the profit earned by the fund. On the other hand, there is the potential future income from future funds.

A fund sponsor’s lifetime income can be as dependent on the ability to raise capital in the future as it is for the income on capital currently under management. A fund sponsor’s “total pay for performance equals the sum of pay for performance features of the explicit compensation contract and the implicit, market-based pay for performance caused by the relation between today’s performance and future fundraising.”

Weisbach takes a closer look at the magnitude of pay for performance for private equity fund managers.

  • For every extra percentage point of returns (or every extra dollar) earned for the current fund’s investors, how much, in expectation, does the lifetime revenue to the fund’s general partners change?
  • How strong is this implicit pay for performance sensitivity relative to the much-discussed explicit one?
  • Theoretically, how should implicit pay for performance vary across different types of partnerships and over time within a partnership? Do these predicted patterns appear true in the data?
  • More generally, how do today’s returns affect the ability of partnerships to raise capital subsequently? How important is future fundraising to the total (explicit plus implicit) pay-performance relation facing private equity general partners, and for what types of partnerships and at what point in a partnership’s lifecycle is it most important?

The results are not particularly surprising:

For all types of funds, both the probability of raising a follow-on fund and the size of the follow-on conditional on raising one are significantly positively related to the performance of the current fund. The magnitude of these relations varies with the scalability of the investments. Buyout funds, which are the most scalable, have the strongest relation, while venture capital funds, which are the least scalable, have the weakest relation.

We also find that these relations are stronger for funds that are earlier in a partnership’s sequence of funds, that is, younger partnerships have stronger relations between future fundraising and current fund returns than older partnerships. This suggests that fund flows in the private equity industry reflect learning about ability over time, and that the strength of the market-based, implicit pay for performance facing a private equity partnership depends on the extent of its prior track record.

The paper does have some interesting data on private equity funds and their operations:

  • The mean (median) preceding fund size is $497.9 ($210.0) million for all funds taken together,
    • $866.4 ($380.0) million for buyout funds,
    • $217.7 ($125.0) million for venture capital funds, and
    • $501.0 ($314.9) million for real estate funds.
  • The mean (median) preceding fund performance is 15.1% (10.6%) for all funds taken together,
    • 16.5% (14.3%) for buyout funds,
    • 14.1% (5.8%) for venture capital funds, and
    • 14.6% (14.1%) for real estate funds.
  • The mean (median) follow-on fund size, conditional on raising one, is $792.2 ($314.0) million for all funds taken together,
    • $1,465.3 ($632.6) million for buyout funds,
    • $283.9 ($181.0) million for venture capital funds, and
    • $694.2 ($425.0) million for real estate funds.
  • The time between successive fundraisings averages 3.3 years for the entire sample,
    • 3.8 years for buyout funds,
    • 3.3 years for venture capital funds, and
    • 2.4 years for real estate funds.

In the end, they conclude that the implicit component of pay for future performance from future funds is on the same order of magnitude as the explicit component of compensation in the carried interest of the current fund. That sounds like a fund manager’s interests are well aligned with the long term interest of the investors in its funds. That’s something that public companies continue to struggle with.

Sources:

SEC Answers Questions About the Pay to Play Rule

The staff of the Division of Investment Management at the Securities and Exchange Commission has prepared responses to some questions about Rule 206(4)-5 under the Investment Advisers Act of 1940.

Here are a few that caught my eye:

Question II.6. Covered Associates’ Family Members.

Q: Are contributions by an advisory employee’s family members covered under the rule?

A: Generally not. However, rule 206(4)-5 and section 208(d) of the Advisers Act prohibit doing anything indirectly which would be prohibited if done directly (see rule 206(4)-5(d)).

Question II.7. Independent Contractors.

Q: If certain personnel of an investment adviser are considered “independent contractors,” rather than “employees,” for state law or tax law purposes, will they still be regarded as covered associates if they solicit or supervise those who solicit government entities on behalf of the adviser?

A: The term “employee” is not defined in the Advisers Act. The staff interprets the term “employee” to include “independent contractors” acting on behalf of an investment adviser (see Interpretive Release No. IA-1000, at II.C.3).

Question III.1. Foreign Governments.

Q: Does the definition of government entity include foreign governments?

A: No.

You can’t run political contributions through your spouse to avoid this rule and you can’t hire someone as an independent contractor to try and circumvent the rule. You can contribute to the political campaigns of foreign officials, but that raises issues elsewhere.

Sources:

Compliance Bits and Pieces for April 1

Here are some compliance related stories that caught my eye:

Playmobil Apple Store Playset from ThinkGeek

So when we spotted this amazing Apple Store Playset from PLAYMOBIL™ we were admittedly in a bit of a conundrum. On the one hand, it’s a product designed for children much younger than ourselves. On the other hand, it’s a tiny representation of the store which sells us all the shiny Apple goodies we can’t resist. Then we noticed that the PLAYMOBIL™ iStore includes amazingly tiny iPhones, Macbooks, and iPads. Our resolve began to waver. A quick peek at the miniature Genius Bar and we were feeling a bit woozy. Then we saw the tiny Steve Jobs presenting in the Keynote Theater on the top floor and that was it. Our wallets popped out faster than you can say Jonathan Ive and we plunked down whatever money was needed to own this amazing playset.

Of course, once we had the playset, we had to get the optional Line Pack to simulate our own exciting Apple product launches. Since it comes with a tiny Woz on a tiny Segway, it was a no-brainer. We decided that Apple & PLAYMOBIL™ together is the most unlikely and awesome collaboration ever. It changes everything.

Real Estate Fund Managers No Longer Need to Worry About SEC Registration from Shearman and Sterling

The financial reform legislation currently before the U.S. Congress, including the bill passed Friday by the House of Representatives, targets hedge fund managers, but would not strip away an exemption from U.S. investment adviser registration rules that is important to real estate fund managers as well. If real estate-focused fund managers were required to become registered investment advisers under the U.S. Investment Advisers Act of 1940, they would find that compliance with the Advisers Act can impose significant burdens and expense.

French Data Protection Act Revoked

Anonymous hotline rules change.

STOCK Act Passes, banning Insider Trading by Members of Congress

The new law sponsored by Rep. Louise Slaughter (D-N.Y.) prohibits members of Congress and federal employees from profiting, or helping others profit, from non-public information—primarily through stock and futures trading—gleaned through their access to privileged, political-based information.

UK Justice Minister Says They are too Busy to Prosecute Under the Bribery Act

“I welcome the Government’s published guidance on the Bribery Act, but the Act is not important for the UK and UK business.  We shall not be enforcing the Act, although we are still keen to listen to the specific issues that companies have and to work with them to resolve problems pragmatically and fairly. We have better ways to spend out time.”

Did I get these stories right? What day is it?

Guidance Under the UK Bribery Act

We have been waiting for some guidance from the United Kingdom about their new Bribery Act since it received Royal Assent last April. The delay on the guidance has delayed the implementation of the Bribery Act itself. Now the guidance is out.

The Bribery Act 2010 creates a new offence under section 7 which can be committed by commercial organisations which fail to prevent persons associated with them from bribing another person on their behalf.

An organisation that can prove it has adequate procedures in place to prevent persons associated with it from bribing will have a defence to the section 7 offence.

The guidance, published here under section 9 of the Act, will help commercial organisations of all sizes and sectors understand what sorts of procedures they can put in place to prevent bribery, as mentioned in section 7.

With the release of the guidance, Kenneth Clarke, Lord Chancellor and Secretary of State for Justice, announced that the Bribery Act will go into force on July 1.

Bribery and Corruption are bad and we want to have systems in place to prevent them and to detect them if they happen. Tucked into Section 9 of the Bribery Act was requirement that the Secretary of State publish guidance about procedures which commercial organizations can put in place to prevent persons associated with them from bribing. Under section 9 of the Bribery Act, the only defense against criminal liability for a commercial organization which has “failed to prevent bribery” is that the organization had adequate procedures” to prevent bribery.

In what appears to be a very user-friendly approach the Ministry of Just has published a Quick start guide (PDF 0.27mb 9 pages) to get you up to speed on the Bribery Act.

Commercial Organization

Of course there is some question about the applicability and enforcement beyond the borders of the United Kingdom. Clearly, if you have operations in the UK and those employees are paying bribes for business to be sent to those operations then it falls under.

If you have an office in London, are all of your operations worldwide subject to the Act? I’m sure we will find out, eventually.

It will be up to the court to decide whether or not any individual organisation can be said to be ‘carrying on a business’ in the UK. They obviously take a range of factors into account – mere listing on the London Stock Exchange or just the fact of having a UK incorporated subsidiary would not necessarily mean the Act applies. To be clear: this is not a ‘carve-out. Under the terms of the Act, it has always been a decision for the courts. – Kenneth Clarke, Lord Chancellor and Secretary of State for Justice

If you have a London office (or operations somewhere in the United Kingdom), or other “demonstrable business presence in the United Kingdom” you should pay attention to the Act. However, merely being listed on the London Exchange alone would not be enough. (See paragraph 36 in the guidance.)

Hospitality

According to Quick Start Guide:

The government does not intend that genuine hospitality or similar business expenditure that is reasonable and proportionate be caught by the Act.

In any case where it was thought the hospitality was really a cover for bribing someone, the authorities would look at such things as the level of hospitality offered, the way in which it was provided and the level of influence the person receiving it had on the business decision in question. But, as a general proposition, hospitality or promotional expenditure which is proportionate and reasonable given the sort of business you do is very unlikely to engage the Act. So you can continue to provide tickets to sporting events, take clients to dinner, offer gifts to clients as a reflection of your good relations, or pay for reasonable travel expenses in order to demonstrate your goods or services to clients if that is reasonable and proportionate for your business.

That may actually be a broader ability to deal with government officials than under the FCPA.

Facilitation Payments

Facilitation payments, which are payments to induce officials to perform routine functions they are otherwise obligated to perform, are bribes. There was no exemption for such payments under the previous law nor is there under the Bribery Act.

That is more strict than the FCPA. They do leave it open to prosecutorial discretion, that based on the facts and circumstances they can decide whether prosecution is in the public interest.

Foreign Public Official

Over here in the US it looks like there some be some court decisions coming down that will add clarity to the definition of a foreign official under the US FCPA. Here is the guidance under the Bribery Act as to who is a foreign public official:

A ‘foreign public official’ includes officials, whether elected or appointed, who hold a legislative, administrative or judicial position of any kind of a country or territory outside the UK. It also includes any person who performs public functions in any branch of the national, local or municipal government of such a country or territory or who exercises a public function for any public agency or public enterprise of such a country or territory, such as professionals working for public health agencies and officers exercising public functions in state-owned enterprises. Foreign public officials can also be an official or agent of a public international organisation, such as the UN or the World Bank.

There is lots to digest in the guidance. Ultimately, other than the removal of facilitation payments I does not seem that compliance with the UK law would be any different than compliance under the FCPA.

Sources:

Real Estate Funds and the Investment Company Act

Traditionally, private fund managers have looked at the section 3(c)(1) or section 3(c)(7) exemptions from the definition of “investment company” to avoid the restrictions of being regulated under the Investment Company Act. Dodd-Frank defined a “private fund” as being “issuer that would be an investment company as defined in Section 3 of the Investment Company Act, but for section 3(c)(1) and section 3(c)(7) of that Act.”

If you want to avoid being a “private fund” you need to look at the other exemptions under the Investment Company Act. Section 3(c)(5) is available for real estate funds:

Any person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses: …  (C) purchasing or otherwise acquiring mortgages and other liens on and interest in real estate.

The SEC has issued some guidance on what is meant by that exemption.

In a No Action Letter issued to Realex Capital Corporation in 1984, the Securities and Exchange Commission did not decline to take action. Realex was looking to invest as a limited partner in a limited partnership that would own and operate a building. The SEC took the position that the interests would be “investment contracts” and therefore securities, not real estate for purposes of section 3(c)(5). Realex would be relying on the efforts of the managing partners for the success of the enterprise. In this case, Reaex had only limited major decision rights. For example there was a limitation on sale, but Realex could only object if it did not receive net cash proceeds at least equal to its capital contributions.

In a pre-REMIC No Action Letter, the SEC agreed not to action against Premier Mortgage Corporation for a mortgage pooling fund. Premier would acquire whole mortgage loans secured by first liens on the property.

Getting closer to real estate funds, United States Property Investments NV asked for clarification from the SEC for their fund that would be investing in real estate and real estate interests. In 1989, the SEC said the fund’s investment strategy would allow it qualify for the exemption under 3(c)(5). The fund would invest only in fee interests in real estate, joint ventures formed to acquire real estate, mortgage loan secured by real estate, and interests in joint ventures formed to make mortgage loans secured by real estate. At least 55% of the investments would be exclusively backed by real estate. The remainder would mortgage loans secured primarily, but not exclusively, by real estate.  The fund’s joint venture interests would be exclusively general partnership interests and would be active in the management and operation, including consent for major decisions.

Following that letter, City Trust followed up with a similar investment fund that would established for buying commercial mortgage loans and equipment loans in the form of industrial development bonds. This letter request combined the real estate mortgages in clause (C) of 3(c)(5)  with the purchase money debt for merchandise, insurance, and services in clause (A).

The United States Property Investments NV letter is the most useful to real estate private equity funds looking for 3(c)(5) as an exemption to avoid being defined as a “private fund.” It’s not clear what lesser amounts of real estate would be acceptable. It’s also not clear whether a more complicated structure of ownership would change the analysis. Real estate funds often have lots of intervening entities to satisfy tax, ERISA, financing and management issues.

The other thing to keep in mind is that using the 3(c)(5) exemption may get you out from under the definition of a private fund, but does not necessarily mean that you are not an investment adviser. It just means that the management company is not an adviser to a private fund.

Sources:

Image of Royal Exchange London is from the Library of Congress

Are you an Investment Company?

Fund managers are dealing with Dodd-Frank and the requirements under the Investment Advisers Act made by the Securities and Exchange Commission. Of course, a fund manager needs to focus on other areas of financial regulation and enforcement by the Securities and Exchange Commission. Fund managers need to keep focused on how they comply with the Investment Company Act.

Section 3 of the Investment Company Act has this definition:

1. When used in this title, “investment company” means any issuer which–

A. is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities;

B. is engaged or proposes to engage in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any such certificate outstanding; or

C. is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 percentum of the value of such issuer’s total assets (exclusive of Government securities and cash items) on an unconsolidated basis.

This leaves you with the tricky analysis of whether your investments are securities. To avoid that mess, most private funds look to two exemptions from the definition of “investment company”: 3(c)1 and 3(c)7.

Under 3(c)(1), the main limitations are that you have one hundred or fewer holders of beneficial interest in the fund and that you do not propose to sell them in a public offering. Under 3(c)(7) you can go beyond the 100 owners, but they need to be “qualified purchasers.” That means they need to have a big wallet.

One challenge for private funds who do not want to register under the Investment Advisers Act is that private fund is defined as an “issuer that would be an investment company as defined in Section 3 of  the Investment Company Act, but for section 3(c)(1) and section 3(c)(7) of that Act.”

There are other exemption available, but they are harder to fit under. You may have a trail of paper work stating that you fall under the section 3(c)(1) or section 3(c)(7) exemption, even though you could claim to fit under one of the other exemptions.

For example, 3(c)(5) is available for real estate funds:

Any person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses: …  (C) purchasing or otherwise acquiring mortgages and other liens on and interest in real estate.

There are some additional limitations that come with this based on some SEC No Action letters. I’ll put some information together on that later.

Sources:

Image is Exchange hall, Copenhagen, Denmark, between ca. 1890 and ca. 1900, published by The Library of Congress

Are you an Investment Adviser?

There has been a lot of focus on the effect of Dodd-Frank on private fund managers. Many had relied on the small adviser exception from registration. If you had fewer than 15 clients (funds) you were exempt from regulation. With the loss of that exclusion, the industry has been looking to other ways to fall outside the requirements of registration.

One may be to take another look at the definition of investment adviser and see if it really applies to what your fund does.

Section 202(a)(11) of the Advisers Act defines an “investment adviser” as

“any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.”

Let’s break it down into its three components:

  1. for compensation
  2. engaged in the business
  3. provide advice about securities

A person or firm must satisfy all three elements and not fall into one of the half dozen statutory exclusions to be regulated under the Advisers Act.

For fund managers, the “compensation” is easily satisfied. A fund manager is giving advice to its funds. Presumably, they are not doing it for free.

The term “securities” is very broadly defined in Section 202(a)(18) of the Investment Advisers Act.

Whether a person providing financially related services is an “investment adviser” is a facts and circumstances test. In  Release IA-1092 (.pdf) the SEC took a look at whether financial planners are investment advisers and provided some ways to look at whether you are in “engaged in the business” of “providing advice about securities.”

Here are some activities that the SEC believes falls into the category:

  • Giving advice about securities, even if it does not relate to specific securities
  • advise concerning the relative advantages and disadvantages of investing in securities in general as compared to other investments
  • in the course of developing a financial plan for a client, advises the client as to the desirability of investing in, purchasing or selling securities
  • a person who advises employee benefit plans on funding plan benefits by investing in, purchase, or selling securities, as opposed to, or in addition to, insurance products, real estate not involving securities, or other funding media
  • providing advice as to the selection or retention of an investment manager (under certain circumstances)

“Engaging in the business” of providing investment advice is a little trickier. Giving advice need not be the principal business activity. “The Giving of advice need only be done on such a basis that it constitutes a business activity occurring with some regularity. The frequency of the activity is a factor, but it is not determinative.”

It comes down to how often a fund manager gives advice to the fund about securities as part of the fund’s operations and investment process.

Sources:

Image is Have a Heart. by A. Golden / CC BY-NC-ND 2.0

Compliance Bits and Pieces for March 26

Here are some compliance related stories that recently caught my eye:

PEI Media’s Private Fund Compliance Forum

Don’t miss your last chance to attend the essential event for compliance professionals in 2011 at a discounted price. Book your place before midnight on Friday March 25 and save $355 off the full delegate price.

(I will be speaking on a panel on the new rules governing fundraising.)

Ethics, Compliance, and Company Size by Matt Kelly

Ethics is not about compliance; ethics is about the discipline to follow a certain code of conduct. Where compliance is mandatory (someone else forces you to obey the code), ethics is voluntary (you choose to obey the code). I go back to that word “discipline” because it’s important: you the employee, you personally, must exercise the discipline to behave a certain way. Nobody can compel you to behave in that certain way; you must, as the cliché goes, buy into that code of behavior willingly.

The Truth About Hedge Funds and the Financial Crisis by Veronique de Rugy in Reason.com

Myth 2: The hedge fund industry’s tendency to take excessive risks, combined with a lack of regulation, was an important cause of the financial crisis.

Fact 2: Not only did hedge funds not precipitate the financial crisis, they did nothing to exacerbate it. If anything, hedge funds have helped the economy to recover more quickly.

Commitment From the Top by Howard Sklar in Open Air

I’ve been told that “tone from the top” has been replaced by a meatier phrase, “commitment from the top.” I would still define it in the same way. Essentially the entire discussion around tone/commitment from the top revolves around the same thing: which comes first, revenue or ethics, when you can’t have both? Compliance officers will tell you that their job is to be a creative solutions vendor for the business (at least, good compliance officers will tell you that). To get to “yes.” Sometimes, however, the answer is “no.” Sometimes, it’s “not only no, but ‘hell no.’” Ethics is what happens next.

Although not compliance-related, as a web publisher I was very interested in The Latest in Style from the New York Times with some revisions to their style guide:

  • We no longer have to write about people sending “an e-mail message” — we can call it “an e-mail.” The term is also acceptable as a verb. (For now, at least, we are keeping the hyphen for this and similar coinages like e-commerce and e-reader.)
  • For now, we’ll continue to capitalize Web and Internet, and we’ll keep “Web site” as two words.
  • A revised entry on Web addresses underscores the need for external linking from our online stories.
  • the ubiquitous “app” is now acceptable in all references to software applications, particularly for mobile.
  • We have eased our guidance on “girlfriend” and “boyfriend.” While traditionalists still view these terms as informal, and even a bit awkward for adults, there’s no ignoring that we live in a city where a mayor of a certain age has a girlfriend of a certain age.