Compliance Building

A Manual of Style for Compliance

I’ve seen some poorly drafted compliance policies. The source of the problem is usually that they were written by lawyers, for lawyers. That is good when it comes to defending your firm against a lawsuit. But it’s a bad thing if the policy does not clearly tell the employees what they can do and what they can’t do.

This problem has been running through the legal industry for years. The Securities and Exchange Commission even published A Plain English Handbook: How to Create Clear SEC Disclosure Documents. The SEC was hoping a non-lawyer could read a corporate filing. There is still little hope of that five years later.

I don’t think it’s the fault of law schools. Like many young lawyers, I was taught in law school to avoid most of the archaic legalisms and to write in a manner closer to plain English.

But for most young lawyers, that writing style is discarded as they start practicing as a junior associates. You quickly realize that you need to write in way that pleases the partner or senior associate you are working for. You are in no position to tell the more senior lawyer that the contract would be better with less legalese and more plain English. You are responsible for one little piece of the transaction. Whatever you draft or edit needs to look and read like the rest. That means lots of legalese.

As you gain experience, you get more direct contact with clients and take the next step of writing to please the client. But clients don’t like having their forms changed. That implies that something was wrong with the old forms. Clients generally don’t want to pay for a lawyer to re-draft the form that they had already paid to have drafted years ago. They especially do not want to pay for style changes or removal of legalese.

Eventually you become senior enough that you can start making changes, but it’s generally on the fringes. You may get a bespoke agreement to draft that is not based on a precedent or form. You don’t have the free time to recreate the form documents to remove the legalese and adopt a more sensible legal writing style.

Ken Adams advocates a more sensible approach to contract drafting. I’m not sure when I became a fan of Ken’s thoughts on contract drafting. It was probably during some wasted time arguing over whether a contract performance standard should have “reasonable efforts”, “best efforts“, or “commercially reasonable best efforts”. I studied his approach and tried using some of his well-reasoned and well-researched approaches. But it was mostly at the fringes.

Now that I have left corporate law to join the world of compliance, there are still many useful aspects of his thoughts on contract drafting that apply to compliance. When he offered me a review copy of his latest, A Manual of Style for Contract Drafting, I thought it would useful to look at his style approach in the context of compliance.

There are lots of lessons in the book for compliance professionals who are tasked with drafting policies and procedures. There is the obvious lesson of not using a dollar word to do a “nickel’s worth of work.” Policies and procedures need to be clearly written and easy to understand. You want to avoid the problem that could lead to a law suit. You don;t want to have to rely on a lawyer for interpretation.

For compliance, you probably don’t need to spend much time in Chapter 8 exploring “reasonable efforts and its variants.” Here’s the spoiler: U.S. courts have overwhelmingly rejected the notion that best efforts represents a more onerous standard than reasonable efforts.

Chapter 12 is full of great lessons on syntactic ambiguity that will improve your policies. While there are a few chapters that are applicable only to contracts, the bulk of the book has lessons applicable to drafting policies and procedures.

Many lawyers will disagree with some (or many) of the approaches that Ken proposes. His substantive positions are backed up by legal research and grammar expertise. It’s hard to argue with facts

My biggest disagreement is on a style approach. I prefer more depth to my numbering scheme. Ken stops at the second level. You can see that approach in the layout of A Manual of Style for Contract Drafting. Each paragraph is numbered. But with the flat numbering, concepts appear scattered. For example I would have preferred the MCSD enumeration scheme to be section 4.53, with each of the paragraphs discussing the scheme to be 4.53.1, 4.53.2, …, instead of 4.53, 4.54.

Even if you don’t adopt Ken’s approach you should at least learn about the substance behind the approach. You can purchase A Manual of Style for Contract Drafting from the American Bar Association.

A Manual of Style for Contract Drafting, Third Edition

Product Code:	5070661
Author:	Kenneth A. Adams
Publication Date:	February 2013
ISBN:	978-1-61438-803-6
Page Count:	511


Pricing:	$99.95 (Regular)
Pricing:	$74.95 (Business Law Section) ABA Members, Log in now to receive this discount!
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Doesn’t Matter if Real Estate is a Security if You Lie to the Feds

I continue to look at the margins where real estate and securities meet, so any case brought by the SEC against an real estate firm catches my eye. The latest to catch my attention was an investigation into Robert J. Vitale and his investment company, Realty Acquisitions & Trust. While there might be some argument as to whether the SEC had jurisdiction, that didn’t matter once Mr. Vitale lied to the Securities and Exchange Commission examiners.

The SEC was conducting an official investigation into allegations that Vitale engaged in violation of the securities laws. The SEC attempted to identify assets and bank accounts attributable to Vitale and asked for a statement of accounts. Vitale provided a “Background Questionnaire” form to the SEC purporting to list bank accounts and other assets attributable to him. But shortly before completing the questionnaire, Vitale transferred $100,000 from an account that was disclosed on the form, to a separate account that he controlled.

The Department of Justice stepped in and charged Vitale with willfully failing to disclose the existence of those funds and the bank account. To compound the problem, Vitale lied about the accounts and the cash during sworn testimony in an SEC investigation.

Vitale was likely a target because he had previously run into trouble with the SEC and been barred from the brokerage industry as a result.

As the blue fairy said to Pinocchio: “A lie keeps growing and growing until it’s as plain as the nose on your face.” That makes it really easy for the Feds to charge you with obstruction of justice, even if you may not have been guilty of the underlying crime.

Sources:

Compliance Bricks and Mortar for May 31

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These are some of the compliance-related stories that recently caught my attention.

Professional SEC Whistleblower Firm Seeks Investors to Finance Investigations by Bruce Carton in Compliance Week

Now, it appears that the first generation of professional whistleblowers is upon us. The ABA Journal reports that Ted Siedle, a former SEC lawyer who is now an “industry watchdog,” is seeking to raise about $1.8 million from investors to create an “investment fund to cash in on the agency’s new whistleblower program.”

Examining Investment Advisers: The Challenge Continues by Elisse Walter in The CLS Blue Sky Blog

An excerpt of a speech that Commissioner Walter gave on April 16, 2013 at the 2013 NASAA Public Policy Conference in Washington, D.C.

As you are aware, the Dodd-Frank Act transferred oversight of mid-sized investment advisers from the SEC to the States. Investment advisers are an area of special concern to regulators because, among other reasons, advisers are fiduciaries charged with handling the investment assets for millions of middle-class Americans, including retirement funds, children’s college funds, and money for down payments on their homes — in a way, these assets are the vehicles to their dreams and hopes. Advisers are a critical part of the American economy, and are in a uniquely intimate position to do tremendous good — or tremendous damage — to clients and their families.

Whether my Aunt Millie trusts her assets to a small adviser with a shingle hung outside a red-brick Main Street office, or to an adviser to a large mutual fund headquartered in a steel and glass Wall Street high rise regulators need to be there. As Millie sits in an office, listening intently to her adviser and trying to understand, she’s relying on us.

But that’s been a challenge for regulators, and particularly for the SEC. The point of Dodd-Frank’s re-allocation of oversight, after all, was to increase examinations of investment advisers. The Commission just wasn’t able to do enough.

So, as it did in 1996 with NSMIA, Congress moved responsibility for many advisers to your agencies, which are now absorbing the additional responsibility. Believe me — I can empathize with the position that you are in. I’ll return to that a bit later, but for now I’d like to focus on how we’ve worked through the transition together.

Private Equity Endorses IPEV Valuation Guidelines

“The Private Equity Growth Capital Council (“PEGCC”) announced today that they have endorsed the International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines from December 2012. The IPEV Valuation Guidelines are used globally as the framework for valuing private equity investments for financial reporting purposes. “The IPEV Valuation Guidelines have been endorsed worldwide by both private equity and growth capital firms and their limited partner investors,” said Steve Judge, President and CEO, PEGCC. “They are the recognized standard for valuing private equity portfolio companies and provide guidelines for preparers and users of financial statements as well as their auditors and accountants.”

Liberty Reserve Founder Indicted on $6 Billion Money-Laundering Charges By Kim Zetter in Wired.com’s Threat Level

The founder of digital currency system Liberty Reserve has been indicted in the United States along with six other people in a $6 billion money-laundering scheme, in what authorities are calling the largest international money-laundering case ever prosecuted, according to documents unsealed today. Dubbed the “financial hub of the cyber-crime world,” authorities say Liberty Reserve had more than 1 million users worldwide and processed more than 12 million transactions annually as the favored money-laundering service for carders, hackers and other cybercriminals in the digital underground who used it to transfer money around the world effortlessly and anonymously.

SEC Obtains Asset Freeze Against Front Running Equity Trader by Thomas O. Gorman in SEC Actions

The Commission’s revamped inspections program, which now utilizes a risk based approach and works more closely with the Enforcement Division,, continues to uncover wrongful conduct resulting in enforcement actions. This time the program discovered a front running trader who used his position for personal profit through secret trades in his wife’s account at the expense of the firm’s institutional clients. SEC v. Bergin, Civil Action No. 3:13 cv 1940 (N.D. Tx. Filed May 23, 2013).

A Look Inside a Money Laundering Investigation

In The Infiltrator, Robert Mazur provides an encyclopedic account of his undercover work. Mazur spent years undercover infiltrating the criminal hierarchy of Colombia’s drug cartel, and the dirty bankers and businessmen willing to launder drug cash. His work led to the arrest of dozens of drug traffickers and money launders. It also led to the dismantling of BCCI, a large banking operation that seemed focused on dirty money.

The undercover operation concluded with a fake wedding that was attended by BCCI officers and drug dealers from around the world. The bank officers were all too willing to continue the banking relationship even after Mazur explicitly told them he was moving drug money from the United States to Columbia.

I was interested in the book to see if I could get a better sense of how criminals found targets for money laundering operations. Unfortunately, The Infiltrator provided little insight on how money laundering works. I was hoping for more. BCCI was all too willing to take big piles of cash and assist with money laundering.

I didn’t expect the book to be exceptionally well written or to have a strong narrative. It was written by a federal agent from his first hand experience. Most of the book reads like a police report, dictating the story in a very matter-of-fact manner.

Given the time-frame of the book, it pre-dates the current regulatory restrictions on Know-Your-Customer and predates the internet. That makes it feel very dated and very Miami Vice.

SEC Warns About Exemptive Order Compliance

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The SEC’ Division of Investment Management issued new guidance to reminds firms to comply with conditions and representations in exemptive orders. The guidance suggests that firms “adopt and implement policies and procedures reasonably designed to ensure ongoing compliance with each representation and condition in any such order.”

The guidance was triggered by June 2011 report from the SEC’s Office of Inspector General which noted noncompliance with exemptive order requirements and no-action letters. Besides this guidance, the Office of Compliance Inspections and Examinations’ 2013 examination priorities listed compliance with exemptive orders as an examination priority.

The SEC may allow a firm to engage in transactions that would otherwise be prohibited by securities laws by means of an exemptive orders. In order to receive this exemptive relief, a firm will make certain representations in its application and may agree to comply with certain conditions.

Based on its review of a sample of OCIE examination reports, the OIG determined in its 2011 report that many firms failed to comply with the representations and conditions of SEC exemptive orders and no-action letters they have received.
The OIG report found that the SEC divisions that issue relief do not have a process for confirming whether firms subsequently comply.

It’s a simple problem found in many organizations. One part of the SEC issues the exemptive relief and another conducts the inspections. The one conducting the inspections is probably not aware of the exemptive order or the need to comply with the provisions. It sounds like that is starting to change.

The OIG report made five recommendations intended to enhance the SEC’s oversight of exemptive order compliance.

(1) The Divisions of Investment Management, Trading and Markets, and Corporation Finance should develop processes for coordinating with OCIE regarding reviewing for compliance with conditions and representations in exemptive orders and no-action letters issued to regulated entities on a risk basis;

(2) The Divisions of Investment Management, Trading and Markets, and Corporation Finance, in coordination with the Office of Information Technology and OCIE, should develop and implement processes to consolidate, track, and analyze information regarding exemptive orders and no-action letters;

(3) The Divisions of Investment Management and Trading and Markets should, in their plans for implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act requirement that they establish their own examination staffs, develop procedures to coordinate their examinations with OCIE and include provisions to review for compliance with conditions and representations in exemptive orders and no-action letters on a risk basis;

(4) The Divisions of Investment Management and Trading and Markets should include compliance with the conditions and representations in significant exemptive orders and/or no-action letters issued to regulated entities as risk considerations in connection with their monitoring efforts; and

(5) OCIE should include compliance with conditions and representation in significant exemptive orders and no-action letters issued to regulated entities as risk considerations in connection with its compliance efforts.

Although the 2011 OIG report also include no-action letter, this 2013 guidance only mentions exemptive orders.

Sources:

SEC’s Compliance Outreach Program

I was able to attend the Boston stop on the SEC’s Compliance Outreach Program.

Michael Garrity, the Associate Director of the Boston Examination Program kicked off the program, by highlighting some examination statistics. There are 1200 registered adviser in the Boston region. But there are only 50 examiners. Last year, they had 80 exams. They are clearly taking a risk-based approach to examinations because the resources are so limited. They are getting increased data and are working on finding the signal through all the noise.

The first panel focused on examination priorities and risks.

The selection process is one involving qualitative and quantitative review. The SEC uses the Form ADV information, third-party data providers, and media stories, among other sources to select firms for examination. These are some of the red flags that may make an exam more likely:

Firms in the media
Firms with new product lines / closed product lines
Management changeover
New fee arrangements
Decentralized firms or odd structures
Use of riskier service providers

In a post-Madoff world, the SEC takes Tips, Complaints, and Referrals as the top indicators for examination. The biggest red flag is when someone takes the time to the tell the SEC that a firm is doing something wrong.

The SEC is trying to be transparent in examination priorities. The 2013 SEC Examination Priorities clearly lay out what the SEC is most likely to focus upon. The exam staff expects to update the exam priorities each year.

The panel made it clear that the Form ADV is used in selecting firms for examination. However, they seemed to indicate that the exam staff has not quite figured out how to deal with all of the information in Form PF. Examiners will use the information in Form PF as part of the examination. But its seems that the data is not yet an integral part of the selection criteria.

Valuation was the number one topic for examination when it comes to funds. It affects performance marketing and fee generation. The examiners are not going to second-guess assumptions, but do want to see a robust process. Although an examiner will not second-guess assumption, an examiner may look at other market data to see if it distinctly contradicts the assumptions used.

In particular, an examiner will note if valuations are “being tweaked when new funds are raised”. The panel referred to the Oppenheimer case where there was distinct change in the valuation process with no justification or disclosure. The panel also referenced the Morgan Keegan case where there was distinct hanky-panky during the valuation process.

The examiners want to see if the written polices and procedures are effective. They want to make sure that marketing pressure does not affect valuations. The exam staff is looking for ad hoc changes.

Social media is hot topic for examination. The panel pointed to last year’s risk alert on investment adviser use of social media. The use of social media is clearly subject to the anti-fraud rule. Most of it will also be subject to the advertising rule. The exam will focus on social media if the adviser uses social media to target clients and potential clients, not for personal or non-business use.

Safety and security of client assets is another hot topic for examinations. Based on the recent risk alert, the SEC is not happy with compliance under the custody rule. Many advisers fail to understand that they have custody.

A new issue is the application of the identity theft rules under the FRCA. Dodd-Frank made the Red Flags Rule applicable to the SEC. Regulation SID will have a November compliance deadline.

The second panel was on the current topics in money management regulation.

The first line of discussion was who would show up at an examination. In the Boston office, it is now common to have a member of enforcement take part in an examination. However, this is for educational purposes, not because of the likelihood to bring an action. With the massive inflow of hedge funds, private equity funds, and real estate funds, the SEC is trying to develop expertise in these types of advisers. The Boston office also has staff intern in different divisions. So an examination person will work for six months in enforcement and an enforcement person will work for six months on exams.

The number one reason for an enforcement action is failing to fix problems that you say you will fix. The SEC is now routinely making follow-up returns to see if a firm has made the changes mandated in the deficiency letter.

The panel downplayed the enforcement actions against compliance staff. The cases against compliance officers are for egregious failures.

Expenses bubbled up as a hot topic. Examiners will look closely at expenses billed to investors. The examiners want to know that these expenses are clearly disclosed to investors. For funds that means the PPM and Partnership Agreement. The examiners said they want to see written expense policies and to see them tested.

The SEC examiner strongly suggested that registrants prepare a risk matrix. One advisor thought this was providing a blueprint for the SEC to conduct their audit. They want to see a catalog of risks, status, rating and worst case impact for the risk.

The panel listed a few things that make an enforcement action more likely:

Fraud
Misappropration of funds
Intent
Investor harm
Recidivism
Failure to respond to exam staff
Providing false information to staff

The panel raised the current hot topic of Broker-dealer registration for internal marketing personnel at private fund managers. The panel noted the David Blass speech on private funds and broker-dealer registration.

The third panel focused on the examination process.

There are four types of exams:

Risk priority exam
Cause exam
Sweep exam
Presence exams for new registrants.

The presence exam program started 10/12 and is expected to end in the fall of 2014. The SEC plans on compiling findings from these exams and releasing that compilation or risk alert to all registered advisors. The presence exams are short – less than a week. The focus is on the five areas in the October welcome letter: Marketing, Conflict of interest, Safety of client asset, Portfolio Management, and Valuation.

They also mentioned a fifth type of exam: corrective action review. This a follow-up after an “exam summary letter” (nee’ deficiency letter) and focuses on whether the firm fixed the deficiencies they said they would in the letter.

It is the SEC’s policy to not disclose the type of exam during the examination process.

As for the process, it usually starts with a phone call to let you know they are coming. The notice could be from none to two weeks. Typically it will be one week’s notice. Can you postpone the field date? Almost never. (One participant told me that the SEC came on the date of his annual investor meeting and would not move the date.)

The examiners will interview senior staff. The CCO can be present for all interviews.

The panel paid a lot of attention on annual reviews. After all, it is required by the SEC rules. They expect the following to be addressed in the annual review:

Review and document compliance issues for the year
Review change in business activities
Note Regulatory changes
Changes in key personnel

It’s okay to outsource the annual review.

Identify risks and either (1) change the policies and procedures, (2) test, and/or (3) mitigate.

Use the annual review as an opportunity to highlight your resources and all of the good things you have done over the past year.

At the end of the exam you will get a letter to know its over. The letter will be either a summary letter or a no further action letter.

As you can tell from my notes, this was a great program for compliance officers.

Compliance Bricks and Mortar for May 17

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These are some of the compliance-related stories that recently caught my attention.

White: SEC’s No. 1 priority is more adviser examinations By Mark Schoeff Jr. in Investment News

The Securities and Exchange Commission’s top priority is to increase the number of investment adviser examinations it handles every year. How to go about doing that is another question.

“Significant additional coverage is essential if investors are to be appropriately protected,” SEC Chairman Mary Jo White told lawmakers today, pointing out that in fiscal 2012, the agency examined only 8% of registered investment advisers, who now number about 11,000.

The Importance of a Senior Executive Compliance Committee by Michael Volkov in Corruption, Crime & Compliance

We all know that corporate boards play an all important role in an effective compliance program. Not as much attention is paid to the operation of senior executive compliance committees. This is a different animal than the compliance committee at the board level. A senior executive compliance committee consists of the key senior corporate officers needed to carry out an effective compliance program.

A PWC Compliance Survey conducted last year found that 71 percent of surveyed companies have a senior executive compliance management committee. But not all committees guarantee success. Some committees work well and some do not.

Four Keys to Compliance Leadership by Tom Fox

I recently read an excellent article it the Corner Office section of the New York Times (NYT), entitled “We’re Family Yes, but We’re Still Accountable”, in which Adam Bryant reported on his interview with Brooke Denihan Barrett, the co-Chief Executive Officer (co-CEO) of the Denihan Hospitality Group (Denihan), a 50-year old family business which focuses on the hospitality business.

Training
Accountability
Listening
Hiring and Promotion

Reflections on the updated COSO Internal Control Framework by Norman Marks

I am still in the process of my detailed review of the update. However, I have already formed two opinions:

1. The assertion that “an effective system of internal control reduces, to an acceptable level, the risk of not achieving an entity objective and may relate to one, two, or all three categories of objectives” is excellent and I am pleased that it comes before any discussion of principles

2. The assertion that follows, that this (reducing risk to an acceptable level) requires that “each of the five components and relevant principles is present and functioning” creates a serious problem

Marketing The FCPA … The FCPA Risks Of … Well, Just About Everything by Mike Koehler in the FCPA Professor

It is a common FCPA Inc. marketing device.

Pluck any FCPA-related item from the news and use that news as the hook to write about FCPA compliance services. Profile any recent instance of FCPA scrutiny and use that scrutiny as the hook to write about a supposed new trend and how that new trend of course indicates the need for FCPA compliance services.

It seems as if everything now-a-days is a “sobering reminder,” that there is constant speculation as to which industry “is going to be the next target,” and that every company is warned to ask itself will it be prepared when the ”government knocks on the door.”

Image is the Palazzo Barberini a Montelibretti, herringbone bond wall.

Placement Agents and the SEC Inquiry of Private Fund Broker Dealer Requirements

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Broker-dealer regulation in connection with the sale of private fund interests has become a focus of SEC inquiry. The David Blass speech on private funds and broker-dealer registration highlights the issue. If you have internal marketing people who are getting paid transaction based compensation for selling fund interests, there may be an issue. Even if you don’t pay a commission-like compensation to dedicated internal marketing people you may have a problem.

The big problem with having your internal marketing people re-cast as broker-dealers is that if they are not registered, your fund investors could have a rescission right. One way to deal with the broker-dealer issue is to use a third-party placement agent. Then, the fund manager would not need as much internal marketing manpower. The fund could rely on the placement agent’s broker-dealer registration.

But the SEC started a witch hunt against placement agents in 2009 when it threatened to ban the use of placement agents when dealing with government pension plans. That put fund managers on the defensive when dealing with placement agents. Individual states began instituting their own bans on placement agents. Many investors raised a red flag for compliance issues when a placement agent was involved in a fundraising.

Placement agents had to give some thought as to how they operated their businesses given that they are precluded from acting as an agent when dealing with the big dollars of pension plans.

Of course, many fund managers bulked up their internal marketing groups to deal with the lesser assistance they would get from placement agents. Now the SEC is going after those groups. Unfortunately, the SEC is being very inconsistent on how it wants private funds with savvy investors to operate now that they are under the stricter scrutiny of the SEC.

AIFMD in the UK

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HM Treasury has published its response to its first consultation on the transposition of the Alternative Investment Fund Managers Directive (“AIFMD”) in the United Kingdom. The main thrust of the AIFMD will not hit Europe for a few years, but in the meantime there will be more uniform limitations on private placements in the European Union starting on July 22, 2013. Unfortunately, all of the EU countries are scrambling to get the new regulatory regimes in place. “Scrambling” may imply more activity than is really happening.

The United Kingdom has moved a step closer and published revised draft regulations under the AIFMD (.pdf). The good news is that the UK is proposing to provide a year of transition so that the requirements under the AIFMD for private placements won’t come into full effect until July 2014.

The draft regulations propose replacing the registration process for non-EU managers seeking to market their funds under the U.K. private placement regime with a simple notification procedure. You certify your compliance with the AIFMD. That way the fund manager does not have to wait for the approval of the Financial Conduct Authority before undertaking marketing.

That registration requirement is trouble under the AIFMD. Effectively, you need to go through the registration process and wait for approval before marketing in that EU country. There is no private placement passport. Of course, it may turn out that you end up with no investors in that country.

Now we need the other member countries of the EU to move forward so that European investors don’t get excluded from investment opportunities when the end of July comes around.

Sources:

Compliance Bricks and Mortar for May 10

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These are some of the compliance-related stories that recently caught my attention.

AIFMD Update – US Private Fund Advisers Marketing in the UK in Compliance Avenue

Recent news from the UK suggests that these AIFMs have most likely been granted a reprieve until July 22, 2014 to comply with AIFMD in the UK. Earlier this week, the UK’s HM Treasury (“HMT”) published “Transposition of the Alternative Investment Fund Managers Directive [the ‘AIFMD’]: Questions and Answers” (the “Q&As”) which suggest that they intend to make certain amendments to the current draft of The Alternative Investment Fund Managers Regulations 2013. With the amendments, the final UK regulations implementing AIFMD would permit “existing” U.S. AIFMs (and other third country AIFMs) and “existing” AIFMs from the European Economic Area (comprised of the EU, Lichtenstein, Norway and Iceland) (“EEA”) to have the benefit of the UK’s “transitional provision” which provides a twelve-month transition period until July 22, 2014. Generally, “existing” AIFMs are those in existence and operating as of July 22, 2013. Under the transitional provision, these non-UK AIFMs will be able to market fund interests in the UK without requiring the AIFMs to register with the UK Financial Conduct Authority or generally comply with the AIFMD until July 22, 2014. HMT also states that they intend to amend the draft regulations so that AIFMs relying on this transitional provision will not need to be authorized in order to launch and market new funds in the UK during this period. During the transitional period, these non-UK AIFMs would need to comply with general UK marketing regulations.

The Moral of a Recent Second Circuit Opinion: Don’t Rely on Commas for Disambiguation by Ken Adams in Adams on Contract Drafting

Via this post by Ray Ward I learned of the recent opinion of the Second Circuit Court of Appeals in AIG v. Bank of America (PDF copy here). In the opinion, the court states that whether a modifying phrase following a list of nouns or phrases modifies each item on the entire list, or only the last item, depends on whether the modifying phrase is separated from the last item by a comma.

Use Planes, Trains and Automobiles to get to Compliance Week 2013 by Tom Fox

To say I am excited would be putting it mildly. Yes that most premier of compliance related conferences is on the short horizon; Compliance Week 2013 is nearly upon us. It will be from May 20-22 at the Mayflower Hotel in Washington DC. As usual, Matt Kelly and his outstanding team have put together a first rate program for the General Counsel (GC), compliance practitioner (in-house or outside counsel), FCPA Bar/FCPA Inc. or even Mike Volkov’s good friends, the FCPA Paparazzi. If there is one national compliance conference that you can attend each year, for my money, this is the event. …

For the FCPA consigliori amongst you, I will once again be leading a conversation on the most recent Foreign Corrupt Practices Act (FCPA) developments. With the recent Parker Drilling Company and Ralph Lauren Corporation resolutions and the various individuals who have been indicted or have pled out, it promises to be an interesting and informative time for anyone interested in all things FCPA. If it turns out that after my session you are still craving more insight about effective compliance with the FCPA there will be a session entitled “FCPA Guidance, Right From the Source”. This session will address any lingering questions you may have about the FCPA guidance published last fall by the Department of Justice (DOJ) and Securities and Exchange Commission (SEC). The panel will include the top FCPA enforcers from both the DOJ and SEC, who will offer their latest thinking on anti-bribery enforcement and answer questions from the audience about best practices and putting agency guidance to good use.