Misleading Presentation of Model Results Leads to SEC Fraud Charges
May 9, 2012 Comments Off on Misleading Presentation of Model Results Leads to SEC Fraud Charges
The Securities and Exchange Commission has charged a father-and-son duo of hedge fund managers with securities fraud stemming from claims about their investment strategy and past performance. According to the SEC’s order, Gabriel and Marco Bitran raised millions of dollars for their hedge funds through, among other things, very successful performance track records based on actual trades from 1998 to the inception of their hedge funds. In fact, those track records were based on hypothetical historical investments. In settling the SEC action, the Bitrans and their fund management entities agreed to pay disgorgement of $4.3 million, other monetary penalties and be barred from the securities industry. « 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.
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.
California Extends Emergency Private Adviser Exemption
March 28, 2012 § 2 Comments
The California Department of Corporations this week renewed its emergency rules to extend the period in which certain fund managers can rely on the existing pre-Dodd-Frank “private adviser” exemption from California investment adviser registration.
Senate Lifts Ban on Private Fund General Solicitation and Advertising
March 22, 2012 § 2 Comments
As expected, the Senate passed its version of the Jumpstart Our Business Startups (JOBS) Act today with bipartisan support. The Senate bill adopted amendments to the crowdfunding provisions that differ from the version passed in the House. The chambers will need to reach a compromise on that portion of the legislation.
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