June 14, 2016

FINRA's take on anti-money laundering, FinCEN's beneficial ownership rules, and more in this edition of Fund Forum

4 min

This issue of Venable's Fund Forum provides guidance to assist financial institutions, investors, and financial services providers on matters concerning anti-money laundering compliance, nuances regarding pre-money valuations and post-money issuances, FinCEN's beneficial ownership rule, and the J-51 property tax exemption and 421-a programs.

Anti-Money Laundering: FINRA Walks the Talk

On April 5, 2016, Brad Bennett, FINRA's EVP, Enforcement, delivered a thoughtful, serious speech to the audience at the Securities Industry and Financial Markets Association (SIFMA) Anti-Money Laundering and Financial Crimes Conference. His speech focused on three topics of importance in this area: firm culture, assessing risk, and recent cases. Continue reading our summary of how FINRA walks the talk.

Is the Issue Price for Your Proposed Portfolio Company Investment Inconsistent with Your Negotiated Pre-Money Valuation?

Funds investing in portfolio companies need to understand how a company-level pre-money valuation may become distorted (to the detriment of new investors) when that valuation is analyzed through the prism of the pre-money capitalization table and the related post-money capitalization table (referred to as the "cap chart(s)"). The ramifications may significantly alter the price per share in the new investment round. To learn more, continue reading.

FinCEN's Beneficial Ownership Rules Also Up the Risk-Based Ante

On May 11, 2016, the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) published its long-awaited rule requiring financial institutions (FIs) to obtain from their "legal entity" customers the identity of (1) 25% or greater beneficial owners and (2) a single individual with significant control over the entity, taken together to mean "beneficial owner." The rule has been in process for years, but its publication is concurrent with the release of the "Panama Papers." The rule brings the United States more in line with existing beneficial ownership standards in the European Union and formalizes an enhanced customer due diligence standard in the United States. For more details, click here.

NYC Development Bonus Update: J-51 Property Tax Exemption and Abatement Extended, 421-a Update

On May 10, 2016, Mayor Bill de Blasio signed into law an extension of the "J-51" program, which provides property tax exemption and abatement benefits to eligible residential rehabilitation projects and certain conversions from nonresidential to residential use. The J-51 program can provide owners and developers of residential properties with significant property tax savings and can be combined with certain other economic incentive programs. Continue reading our analysis of the J-51 property tax exemption and our 421-a update.

Upcoming Event:

Webinar: Who Is the New Twenty-first-Century CCO? Current Issues in CCO Liability

Thursday, June 30, 2016 | 3:00 - 4:00 pm ET

What is keeping you up at night?

CCOs can answer this easily: the threat of personal liability if our company fails to comply with regulations. As many NSCP members know, panels at the 2016 SIFMA C&L conference in Orlando conducted feverish discussions on CCO liability and the often impossible position in which CCOs can find themselves with regulators. For instance, how does compliance provide a "credible challenge" to management, and what kind of evidence will the OCC be looking for? What did the SEC mean by its position that CCOs have responsibility for the implementation of compliance programs under 206(4)(7)? And those are just two of the agencies regulating financial services firms.


Jerry Baker, former Executive Director, SIFMA Compliance & Legal Society

Don Andrews, Venable partner and former Bessemer Trust CCO

Michael Manley, Venable partner and a former investment adviser CCO and General Counsel

The panelists will lead an interactive discussion on the current role of the CCO and best practices for the way forward for them in this new environment.

Attendees of this webinar will learn:

  • Effective reporting to management
  • Effective compliance training for all levels of the operation
  • Managing the "regulatory pile-on"
  • The role of and effectively using outsourced CCOs
  • The potential impact of the DOL Fiduciary Rule on CCOs

Registration is open on NSCP's website.

For more information, please call:
NSCP at 860.672.0843 | Venable at 646.277.8165