SEC continues to rein in practices of private fund managers (FundFire)

In a non-stop year of SEC enforcement of its rules and regulations, private fund managers continue to be at the forefront of cases. The SEC recently brought charges against a large hedge fund for what the regulator deemed as language in employee agreements that violated whistleblower protections. According to the settlement, D.E. Shaw improperly required departing employees to sign releases stating that they had not filed complaints in order for them to receive deferred compensation. Amy Lynch, FrontLine’s Founder and President, and other former regulatory insiders, see the trend of cases against private fund managers continuing. Private funds can expect the SEC to be reviewing for violations of the new Marketing Rule, expense allocations, off-channel communications, and conflicts of interest, among other priorities. Ms. Lynch also points to the SEC’s expansive rulemaking, commenting that as more rules are finalized, there will likely be more cases against private funds over the next six to eight months as the SEC looks to support its regulatory agenda. See FundFire (subscription required), “DE Shaw Case Shows SEC Keeping Hedge Funds in Crosshairs”