Member Firms Subject to ESRs May Seek Waiver As we have discussed previously, an NFA Member firm may be required to adopt enhanced supervisory requirements (“ESR”) based on: the employment history of its APs and Principals, the affiliations of its Principals, if the firm charges 50% or more of its [...]

2nd Circuit Holds that FINRA Lacks Statutory Authority and FINRA Rule was Invalid The Securities Exchange Act of 1934 (the “Exchange Act”) authorizes the Financial Industry Regulatory Authority (“FINRA”) and other SROs to regulate within the securities industry. FINRA’s role includes registering and educating industry participants, examining firms, implementing rules, [...]

 Disclosure Under Greater Scrutiny Both registered investment advisers and unregistered managers are generally required to make complete and accurate disclosures with respect to their investment programs.  The obvious purpose of this requirement is to provide potential investors and clients with accurate information so the investors can make informed decision about the [...]

We are currently watching the webcast live and are posting our comments below.  You can watch the meeting live here: http://sec.gov/news/openmeetings.shtml. We will be posting our review of the adopted regulations sometime later today. **** 11:05 AM ET: the open meeting has started and Chairman Schapiro (“CS”) is currently providing [...]

Higher Threshold for Performance Fee Proposed Under current SEC Rule 205-3, an SEC registered investment adviser can charge a performance fee (also called a performance allocation, incentive fee or incentive allocation) only to those investors who either has: a $1.5M net worth or at least $750,000 in assets with the [...]

Story of the CME & CBOT Merger Just a quick note to say I recently picked up the book Zero-Sum Game by Erika S. Olson.  Olson is, at the time the story begins, a newly hired managing director of marketing for the Chicago Board of Trade and she chronicled her [...]

“Lite-Touch” Regulatory Approach for Certain CFTC Registrants In general, CFTC registered CPOs and CTAs must adhere to certain disclosure and reporting requirements as specified in the Commodity Exchange Act (“CEA”) and regulations thereunder.  However, some CFTC registered firms can operate under a “lite-touch” regulatory regime if the firm only provides [...]

One of the consequences of the Dodd-Frank Act is that federal and state jurisdiction over investment advisor firms will change.  In general, fund managers with less than $150 million in AUM will not be subject to registration with the SEC.*  While such managers will not be subject to SEC registration, [...]

SEC Proposes New Form PF for Private Fund Managers At an SEC open meeting today, SEC Commissioners voted to propose rules on a new Form PF. We will be updating this article shortly. **** Bart Mallon is a private fund attorney working and provides hedge fund compliance services through Cole-Frieman [...]

Transition Period for BVI Mutual Funds Act of 1996 Ends on December 31, 2010 Sponsors with funds located in the BVI should be aware that at the beginning of next year there will be a new regulatory regime.  Starting on January 1, 2011, all funds must comply with the requirements [...]