September 2016

An international view of firm culture and regulation, guidance on new requirements for algorithmic traders, and more in this issue of Fund Forum

3 min

This issue of Venable's Fund Forum provides (i) an international view of firm culture and regulation, (ii) a case summary of the Third Circuit's extension of the definition of investment adviser, (iii) guidance to investors on the new requirements for algorithmic traders, (iv) a summary of the new investment advisers modernization act for private equity firms, and (v) a synopsis of the SEC's final rule adopting amendments to Form ADV and other SEC rules.

Culture and Regulation: The International View

Culture and its role in driving behavior has increasingly been the focus of regulators in the United States. American regulators, however, do not have a monopoly on the discussion of regulating culture. Click here to continue reading our summary of an international view of culture and regulation.

Third Circuit Extends the Definition of Investment Adviser in U.S. v. Miller

In August, the United States Court of Appeals for the Third Circuit issued its opinion in U.S. v. Miller. In this case, Everett Miller pleaded guilty to securities fraud and tax evasion arising out of the fraudulent sale to investors of $41 million in promissory notes. The defendant was sentenced to 120 months' imprisonment, due, in part, to the U.S. Sentencing Guidelines additional points for violations of the securities laws by "investment advisers." To learn more, continue reading here.

New Requirements for Algorithmic Traders May Prove Challenging

Algorithmic trading has increasingly occupied an ever-more prominent role in Wall Street Trading. The "flash crash" in 2010 and its aftermath began to pique the interest of the regulators, notably in the 2014 speech of Mary Jo White, wherein she expressed that the SEC had interest in "assessing the extent to which specific elements of the computer-driven trading environment may be working against investors rather than for them." This interest has resulted in a new registration requirement that applies to algorithmic traders. To learn more, continue reading here.

Investment Advisers Modernization Act

On Friday, September 9, 2016, the House of Representatives passed H.R. 5424, the Investment Advisers Modernization Act of 2016, by a vote of 261-145. The bill aims to loosen regulations on private equity firms by eliminating duplicative reporting requirements and allowing for tailoring of certain rules. For more on the Investment Advisers Modernization Act, click here.

SEC Issues Its Final Rule Amending Form ADV, Umbrella Registration and Books and Records

On August 25, 2016, the SEC issued its final rule adopting amendments to Form ADV and other SEC rules. The amendments to Form ADV are designed to provide additional information regarding advisers and establish a method for private fund adviser entities operating a single advisory business to register using an "umbrella" Form ADV. The final rule also adopts amendments to the "books and records" rule under the Advisers Act. To learn more, continue reading here.

Upcoming Event:

September 29, 2016: Firm Culture and Financial Services: How Research May Drive Regulation (webinar)