Doug Cornelius on compliance for private equity real estate
In the proposed Private Fund Reform Rules, the Securities and Exchange Commission had contemplated a ban on charging a portfolio investment for monitoring, servicing, consulting, or other fees in respect of any services the investment adviser does not, or does not reasonably expect to, provide to the portfolio investment. This was an attack on a … Read more »
The private fund industry is plagued with bad actors who don’t disclose fees and affiliate relationships. That has directly lead to the new reporting rule issued by the SEC for private fund advisers. The latest firm to get caught is the Prime Group, based in Saratoga Springs, New York. Prime’s business is investing in self-storage … 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 »
Alumni Ventures Group is New Hampshire-based venture capital fund manager. It raised dozens of funds to pool capital and invest it in small companies. From 2016 through 2020, in marketing the funds the manager said its management fee was the “industry standard ‘2 and 20’.” The funds had a 10-year life. Most of us realize … Read more »
Before the holidays, the Securities and Exchange Commission issued a Staff Statement Regarding Form CRS Disclosures. It caught my attention because this was a weird form of letting the industry know that the SEC had concerns about practices. Then I noticed that the SEC had created a Standards of Conduct Implementation Committee and this statement … Read more »
The SEC’s Division of Examination ran a sweep of exams focused on advisory fees, predominantly those charged to retail clients. Not bothering with any clever names, it was simply the Advisory Fees Initiative. The Division placed 130 examination into the Initiative. The results are in a recent Risk Alert: Division of Examinations Observations: Investment Advisers’ … Read more »
Douglas Elstun failed his clients in two ways. He over charged them and he put them into inappropriate investments. Mr. Elstun invested some of his clients’ money in daily leveraged ETFs, which deliver multiples of short-term performance of a stock index. He also invested some clients in inverse ETFs which are designed to deliver the … Read more »
The Securities and Exchange Commission will always be focused on charges to a private fund that get paid to the fund adviser or affiliate. OCIE placed this warning flag in the sand back in 2015. A fund manager has to clearly disclose affiliate fee in the fund documents. If the fee is based on a … Read more »
For investment advisers the key is conflicts. You have to disclose them and property manage them. What is the biggest conflict for an investment adviser? (The title probably gave it away.) Fees. This is particularly true for private funds where the investors may not see the actual fee calculation. The basis for the calculation may … Read more »
Every compliance officers knows that undisclosed revenue sources at the expense of advisory clients is going to get their firm in trouble. (That’s probably not true. But If you’re a regular reader of Compliance Building, you know that it leads to trouble.) The latest charge comes against Criterion Wealth Management. The SEC’s complaint alleges that … Read more »