Doug Cornelius on compliance for private equity real estate
Financial Industry Regulatory Authority Rule 2210 generally prohibits the use of “predictions and projections” in written communications with the public. FINRA has proposed to dramatically curtail that prohibition. The proposed amendment to Rule 2110 tries to align with the Investment Advisor Marketing Rule’s treatment of “hypothetical performance.” The FINRA proposal is intentionally more narrow. It…
Goodwin Procter put together an informative summary of the California’s Fair Investment Practices by Venture Capital Companies. The compliance date is March 1, 2026 for venture capital fund sponsors. Unlike some of California’s other diversity initiatives, this law does not mandate operational changes. It requires disclosure on demographics of the founders of portfolio companies. The…
Here are some compliance-related stories that recently caught my attention. 2026 Crypto Crime Report by TRM LAbs FINRA Proposes Overhaul of Outside Activities Rules by Brynn Rail, Erin M. Fredrick Conklin, SaraAnn Bannister of Ropes & Gray The Proposal would consolidate the OBA and PST frameworks of Rules 3270 and 3280 into a single rule, new Rule…
We have a few examples of eavesdropping as a source of information for fraudulent insider trading. This was a heightened problem during the work-at-home era and interacting with family members. The insider trading case against a translator was a new take. The translator in question has a family that is a high level executive of…
The Securities and Exchange Commission labels language purporting to limit an adviser’s liability in an advisory agreement as a “hedge clause.” In 2019, the SEC published the Commission Interpretation Regarding Standard of Conduct for Investment Advisers summarizing its position on an advisor’s fiduciary obligations. That statement stated: “there are few (if any) circumstances in which…
Private Equity, BAD!! Bad Company is an overly simplistic tale of capitalism. The author seems to equate private equity with Leveraged Buy-Outs. But that is just one business model. It’s true that the private equity capital stack uses more debt than public companies. That is also true of most privately-owned businesses. And most businesses are…
Investment advisory relationships are not assignable. Section 205(a)(2) of the Advisers Act provides that investment advisers can’t enter into an advisory contract that: “(2) fails to provide, in substance, that no assignment of such contract shall be made by the investment adviser without the consent of the other party to the contract”. So a registered…
I think everyone agrees that members of Congress should not engage in trading based on information they encounter. That is, everyone except members of Congress. There have been several attempts to limit congressional trading. None have made it to the floor for a vote. The current efforts are the Ban Congressional Stock Trading Act sponsored…
One theme of the SEC’s Marketing Rule for investment advisers when it was released in 2020 was for advertised performance to reflect the client’s actual returns. It’s a compliance mantra, you have to shown a net return with equal prominence to any gross return you are showing. The uncertainty in the area that took some…
These are some compliance-related stories that recently caught my attention. Part 2: How Law Schools Can Champion Compliance Careers by Paul E. McGreal Law schools find themselves at a critical juncture. Many students no longer want the traditional path from law school to BigLaw, and instead, seek careers that blend legal expertise with business acumen, preventive…