The SEC’s Division of Examinations recently issued a new Risk Alert (the “Alert”) on Staff observations from examinations of SEC registered investment advisers’ compliance with Rule 206(4)-7 of the Investment Advisers Act of 1940 (“Advisers Act”). The focus of the Alert is on how advisers have complied (or not) with the Annual Compliance Review (“Annual Review”) requirements of the Rule.
Each Annual Review for a firm must contain certain elements that were outlined in the…
The SEC’s Division of Examinations recently issued a new Risk Alert (the “Alert”) on Staff observations regarding economic conflicts of interest found during examinations of SEC registered investment advisers. This is at least the third Alert issued by the Staff since 2018 that covers conflicts of interest in some capacity. The most recent Alert reiterates just how important it is for advisers to ensure compliance programs and client disclosures both mitigate and inform clients of…
Section 205(a)(1) of the Investment Advisers Act of 1940 (“Advisers Act”) prohibits the use of performance-based fees for separately managed accounts (SMAs). However, an exemption exists under Advisers Act Rule 205-3 for accounts of “qualified clients” as that term is defined. A qualified client must meet certain asset thresholds under management or have a high net worth.
The Dodd-Frank Act amended Section 205(e) of the Advisers Act to provide for an inflationary adjustment to the…
We do not typically discuss rule proposals in our ComplianceAlerts as rule proposals can differ greatly from adopted rules. However, this one is worth it as its likelihood of passage is quite high. The new proposal is in relation to Form PF for private funds. This April 20, 2026, release amends Form PF once again from the rule adopted in 2024 with a current compliance date of October 1, 2026. This puts compliance with the…
The Division of Investment Management (“Division”) of the SEC updated its FAQ for fund of fund arrangements on March 5, 2026. This new FAQ addresses the allowable 10 percent bucket of an acquired fund under Rule 12d1-4(b)(3)(ii) of the Investment Company Act of 1940 (the “Rule”). The Rule contains prohibitions on an acquired fund’s investments with certain exceptions.
The Rule exists to prevent duplication of fees and expenses in multi-tiered complex fund structures. Essentially, if…
