Doug Cornelius on compliance for private equity real estate
Cherry-picking and block trading accounts go hand in hand. The most recent firm to be found doing this is North East Asset Management and its principal Greg Zandlo. According to the SEC order, the firm had block trading account at an unaffiliated brokerage firm. This allowed the firm to place purchase and sale orders for…
Ever wonder what the Securities and Exchange Commission does with Form PF data? The SEC’s Division of Economic and Risk Analysis just published a paper analyzing beneficial ownership concentration and fund outcomes: Beneficial Ownership Concentration and Fund Outcomes for Qualifying Hedge Funds. Specifically, DERA looked at Form PF question 15 that asks what percentage of…
I’ve now seen the best sales pitch for investors in a Ponzi scheme “Yo Homie! the MCAs are crankin!” delivered to an “investor” on Skype. This message came from Patch Baker. The MCAs are Merchant Cash Advances. That Skype chat is printed in paragraph 111 in the complaint against Mr. Baker and Joel J. Natario…
The Securities and Exchange Commission obtained final judgments against Safeguard Metals and its principal, Jeffrey Ikahn. The SEC charged Safeguard and Ikahn with acting as unregistered investment advisers by persuading investors to sell their existing securities, transfer the proceeds into self-directed Individual Retirement Accounts, and invest the proceeds into gold and silver coins provided by…
One legal question that has renewed interest over the past few years is “what is a security?” Crypto lovers will tell you that their stuff is not securities. It all goes back to the definition of “security” and the less conventional term within that definition of “investment contract.” The Howey test focuses on that term…
When the Securities and Exchange Commission brings charges against a real estate company, it catches my eye. The SEC accused Joshua Schuster and Schuster Enterprises LLC (d/b/a Silverback) of misleading investors and misappropriating some of that invested capital. Of course, this is just the SEC’s side of the case and Mr. Schuster has not had…
Back in 2019 (before the pandemic) the Securities and Exchange Commission, brought a case against Commonwealth Equity Services, LLC (d/b/a Commonwealth Financial Network), a registered investment adviser and broker-dealer, with failing to disclose material conflicts of interest related to revenue sharing Commonwealth received for certain client investments. The SEC prevailed in federal court, with an…
On April 4, 2025, the SEC’s Division of Corporation Finance issued a statement in an effort to provide greater clarity to stablecoins under the U.S. securities laws. The statement concludes that stable coins that are US Dollar-backed, fully reserved, and non-yield-meet do not involve the offer or sale of securities. Therefore these “Covered Stablecoins” do not…
Sliding in at the end of the deadline, FinCEN released an interim final rule that removes the beneficial ownership reporting requirements for U.S. companies and limits it to only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction. The…
On March 19, the Division of Investment Management published an updated FAQ on the Marketing Rule addressing extracted performance. The January 2023 Marketing Rule FAQ on extracted performance has been substantially revised. The old FAQ had required the calculation of new return for the performance shown in a case study for a private fund. I…