Doug Cornelius on compliance for private equity real estate
Earlier this year, the SEC’s Division of Examinations published its priorities for 2022. There was a significant focus area on private funds. In particular, looking at: “compliance with the Advisers Act Custody Rule, including the “audit exception” to the surprise examination requirement and related reporting and updating of Form ADV regarding the audit and auditors … Read more »
The Securities and Exchange Commission has made it clear that one of its primary points of interest with private funds is fees and expenses. Some of that is well-deserved. Some private funds had a history of being opaque about fees and expenses. A recent enforcement case by the Securities and Exchange Commission highlights mistakes that … Read more »
Angel Oak Capital Advisers sponsored a fund to securitize “Fix and Flip” loans. These loans were targeted at borrowers for the purpose of purchasing, renovating, and selling residential properties. It looks like Angel Oak didn’t get the underwriting correct. Angel Oak saw an unexpected increase in late mortgage payments delinquencies. The securitization had a covenant … Read more »
After a hiatus for the heat of the summer, here is a compliance case of valuation malfeasance. It comes from the biggest collapse of a private equity fund manager. The Abraaj Group and its CEO, Arif Naqvi, were vanguards in emerging markets investments. After some early success buying and transforming Inchcape Shipping Services and Jordanian … Read more »
Enforcement cases against a Chief Compliance Officer always catch my attention. The latest to catch my eye is against A.G. Morgan Financial Advisors, LLC (“AGM”) of Massapequa, New York, AGM’s owner Vincent J. Camarda, and AGM’s former Chief Compliance Officer James McArthur. The SEC Commissioners and senior Division of Examination staff have usually stated three … Read more »
Buying and selling securities is often equated with gambling. (The differences are that you can hold your securities and keep winning without making any bets.) Gamblers and investors are always looking for an edge to increase their odds of success. When it comes to investing, that edge can be the misuse of insider information. The … Read more »
Regulatory Compliance Watch compiled information from the 14,400 advisers who filed a revised Form ADV at the end of March. RCW Exclusive: An Industry Portrait Drawn From Form ADV Data. For those of you who do not subscribe, here a few pieces of data that caught my eye. Registered investment advisers’ assets under management increased … Read more »
Among the many, many, many legislative actions in Dodd-Frank, one section gave the Securities and Exchange Commission broader authorization to bring enforcement actions through its internal administrative law judges instead of through federal courts. The SEC decides which cases to bring to the ALJs and which it wishes to bring in federal court. In federal … Read more »
Maybe. The Securities and Exchange Commission is going to propose standardization of environmental, social, and governance disclosures to investors and to the SEC. The vote happens at the SEC open meeting on May 25. MATTERS TO BE CONSIDERED: 1. The Commission will consider whether to propose amendments to the rule under the Investment Company Act … Read more »
The basic premise of the Custody Rule is that registered investment advisers who have custody ofclient assets must implement specific safekeeping requirements to prevent loss, misuse, or misappropriation of those assets. (Rule 206(4)-2) For non-fund managers, there is a surprise exam requirement. For fund managers, the usual route is through audited financial statements. The Custody … Read more »