Doug Cornelius on compliance for private equity real estate
Pump and Dump schemes brought the fiduciary standard to light. In SEC v Capital Gains Research Bureau the US Supreme Court said a pump and dump scheme by an investment adviser violated its fiduciary duty. More recently, the SEC published an investor alert about Social Media and Investment Fraud. There is a lot of different … Read more »
When the Securities and Exchange Commission enacted the Investment Adviser Marketing Rule at the end of 2020, it threw out decades of cobbled together opinions, no action letters, and informal guidance. In the 18 months it took to reach the compliance date, the SEC offered little in the way of additional guidance. The SEC made … Read more »
On December 22, 2020, the Securities and Exchange Commission adopted the new Marketing Rule (amended Rule 206(4)-1) under the Investment Advisers Act that will replace both the current advertising and cash solicitation rules and will govern investment adviser marketing. Since it’s a complete re-write of investment adviser marketing, most, if not all, of the staff … Read more »
Going back over my notes in search of guidance on when advertising for a private equity firm is advertising restricted under the Investment Advisers Act and when it is advertising for the firm’s products and services, I’m left uncertain. I was hoping that the gun jumping interpretations would offer some meaningful guidance. So far, I … Read more »
I began exploring the difference between advertising the soup and advertising the securities in yesterday’s post. That is, I looking for distinction between a private equity firm advertising in relation to its portfolio companies or real estate holdings, and advertising its performance as an investment adviser. Portfolio company advertising is outside the legal framework under … Read more »
While looking through the various restrictions on advertising for investment advisers, I was struck by how they fail to address the operations of private equity funds. The Securities and Exchange Commission effectively banned advertising by investment advisers for decades. As reality came, the SEC relented, subject to strict restrictions. In this post-Dodd-Frank world with private … Read more »
The Securities Exchange Commission published an update to Form ADV last week. I’m going to devote this week’s stories to some of the new requirements. Today, I’m looking at reporting of social media. Item 1.I of Part 1A of Form ADV currently requires registered investment advisers to list their websites. The SEC is casting a wider … Read more »
Yesterday’s post on faking returns made me think about the use of theoretical models and the ability of an investment adviser or fund manager to use hypothetical performance instead of actual performance. The real use of performance figures is in advertising, so the SEC’s rules on advertising are the key focus. (I don’t see how … Read more »
Advertising and corporate communications is a rough area for compliance when used in capital formation. The rules are restrictive, not always intuitive, often vague, and in direct opposition to the revenue-hungry side of the company. Last week, the House Committee on Oversight and Government Reform heard testimony on “how securities regulations have harmed public and … Read more »
Once a fund manager is registered, Rule 206(4)-1 imposes additional restrictions on advertising that the SEC has determined would be fraudulent deceptive or manipulative. That means public presentations could be considered an advertisement. First I want to look back at the definition of an “advertisement” for purposes of the rule. An advertisement for purposes of … Read more »