Private Fund Managers: Navigating Recent SEC Guidance on Custody Rule, Qualified Client Status, Knowledgeable Employees, Social Media and CCO Liability

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Tuesday, September 9, 2014

Recorded event now available

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Course Materials

This CLE course will provide commercial finance and private equity counsel with a review of recent legal developments impacting managers of private equity funds and other private investment vehicles. The panel will discuss guidance by the SEC’s Division of Investment Management and SEC enforcement actions, outline compliance challenges and offer solutions, and brief attendees on other practical implications of the new guidance.

Description

Recent SEC guidance includes application of the custody rule to the use of special purpose vehicles (SPVs) for making investments, the use of escrow accounts when selling interests in portfolio companies, the use of social media, and the aggregation of different fund accounts for determination of Qualified Client status.

The SEC has issued an interpretive letter to the Managed Funds Association (MFA) providing favorable interpretations of the concept of a knowledgeable employee. The MFA letter expands the number of situations where employees of private fund managers will be considered to be knowledgeable employees.

In several speeches, senior SEC staff members have provided insight into the SEC’s approach to broker-dealer issues impacting private fund managers as well as situations where the SEC has concern about fees charged by fund managers.

Of particular concern is the recent trend of SEC actions against fund adviser chief compliance officers for the misconduct of one of the adviser’s employees. CCO/general counsel must be cognizant of the risks of personal liability for manager personnel.

Listen as our authoritative panel of finance attorneys reviews key regulatory developments impacting managers of private equity funds and other private investment vehicles. The panel will discuss recent guidance by the SEC’s Division of Investment Management and SEC enforcement actions as well as practical implications of the new guidance.

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Outline

  1. SEC Presence Exams—status, items covered by SEC staff
  2. SEC guidance
    1. Custody rule
    2. Aggregation of different fund accounts for determination of Qualified Client status
    3. Knowledgeable employees—MFA Letter
    4. SPVs and escrows
    5. Use of social media
  3. SEC concern about fees/transparency—Bowden speech
  4. Broker dealer issues
  5. CCO liability—selected enforcement actions

Benefits

The panel will review these and other key questions:

  • What has been the scope of the SEC’s Presence Exam Initiatives and what is the SEC’s goal going forward?
  • Under what circumstances will multiple advisers qualify as a “single advisory business”?
  • When may a CCO be held personally liable for the misconduct of one of the adviser’s employees?

Faculty

Pankey, David H.
David H. Pankey
Partner
McGuireWoods

Mr. Pankey's practice includes all aspects of transactional securities work and corporate finance, with an...  |  Read More

Kevin Boardman
Kevin Boardman
Partner
McGuireWoods

Mr. Boardman concentrates his practice on advising private investment funds and institutional clients in connection...  |  Read More

Anitra T. Cassas
Anitra T. Cassas
Partner
McGuireWoods

Ms. Cassas is a co-chair of the firm's broker-dealers and investment advisers industry team. She has a securities...  |  Read More

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