Financial Services Committee Proposes Investment Adviser SROs

April 26, 2012 Comments Off on Financial Services Committee Proposes Investment Adviser SROs

Rep. Spencer Bachus (R-AL), Chair of the House Financial Services Committee, and Rep. Carolyn McCarthy (D-NY) introduced legislation–the Investment Adviser Oversight Act of 2012–that would create new self-regulatory organizations intended to provide more efficient and effective oversight of the retail investment advisory industry. « Read the rest of this entry »

Investment Advisers and Social Media

April 19, 2012 Comments Off on Investment Advisers and Social Media

Growing numbers of investment advisers and fund managers are using social media–Facebook, LinkedIn, Twitter, blogs, etc. After passage of the JOBS Act–and removal of the ban on general solicitation–we expect even more widespread use of these outlets to reach new markets and clients.

Advisers and private fund managers should recognize that these new forms of communication remain under the same antifraud, compliance, and recordkeeping requirements as traditional forms of advertising and communications. The SEC has already charged one adviser with fraud arising from offering fictitious securities through social media sites.

In recognition of the growing role of social media use by advisers, SEC staff has provided guidance for advisers when reviewing their compliance programs to address social media use. « Read the rest of this entry »

Next Steps for the JOBS Act

April 11, 2012 § 3 Comments

Now that President Obama has signed (on April 5) the JOBS Act, the clock is running for the SEC. The agency has 90 days—or until July 4, 2012—to allow general solicitation and advertising for securities offerings to accredited investors under Rule 506 of Regulation D.

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What Should Private Funds Expect After JOBS Act Is Signed?

April 4, 2012 § 1 Comment

Much of the press coverage of the JOBS Act, justifiably, has addressed the Act’s crowdfunding provisions. For private fund managers, however, the most important development is removal of Regulation D’s prohibition on general solicitation and advertising when privately offering securities to accredited investors. The prohibition greatly limits fund managers’ ability to seek out prospective investors, respond to press inquiries and engage in other marketing activities.

In addition to simply lifting the ban on general solicitation and advertising, however, the JOBS Act instructs the SEC to determine methods that issuers must use to verify that investors are, in fact, accredited. Given the SEC’s earlier public criticism of the Act, we may see the agency adopt rules or interpretations that greatly limit how certain issuers (e.g., hedge funds and other private funds) ultimately are able to market their offerings.

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