Francesco Matteini

NEW SEC's Names Rule Amendment DDQ is now available on the DiligenceVault platform. Section 35(d) of the 1940 Act prohibits registered investment companies from adopting names that the Commission finds are “materially deceptive or misleading.” The Names Rule requires that if a fund’s name suggests a particular type of investment or industry, at least 80% of its assets must align with that focus. This rule also applies to names suggesting tax-exempt distributions. The amended Names Rule includes: ● Coverage of names suggesting investment focus ● Rules for temporary departure from the 80% requirement ● Compliance rules for derivatives ● Compliance rules for unlisted closed-end funds and BDCs Allocators interested in assessing asset manager readiness and impact analysis, access these DDQs here: https://lnkd.in/d8aR-eiT #SEC #DueDiligence #InvestorProtection #InvestmentCompliance

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To the likely surprise of providers of buy now, pay later (BNPL) financing, the #CFPB recently issued an interpretative rule stating that BNPL products are actually "credit cards" under the Truth in Lending Act and BNPL providers are "card issuers" and therefore "creditors" under, and subject to, Regulation Z. Scott Pearson, Bryan Schneider and Eric Knight explain the significance here:

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Recent SEC Enforcement Action Highlights the Importance of Robust MNPI Policies in CLO Trading In a significant enforcement action, the U.S. Securities and Exchange Commission (SEC) has sanctioned a private fund manager for failing to implement adequate policies and procedures to prevent the misuse of material nonpublic information (MNPI) while trading securities issued by collateralized loan obligation vehicles (CLOs). This case underscores the SEC’s focus on credit managers and emphasizes the importance of strong compliance frameworks for preventing MNPI violations in CLO trading. https://lnkd.in/eFRMeihK

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Remaining on the proposed Regulatory Agenda list are changes to Regulation D and Form D, including updating the financial thresholds in the accredited investor definition and “improving protections for investors.” I note that in August 2020, the SEC updated the definition of an accredited investor and specifically decided not to increase the financial threshold. #SecuritiesLawBlog #SEC #ALCLAW

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SEC Charges Firms With Record-Keeping Violations for Off-Channel Communications - that pesky Watsapp chat!!! SEC announced settlements with 16 firms relating to record-keeping violations stemming from off-channel communications totaling $81 million. The 16 firms were five broker-dealers (BD firms), seven dually registered broker-dealers and investment advisers, and four affiliated investment advisers (IA firms). Off-channel communications are unapproved methods of communication used for business-related communications. The settlements were a result of the SEC Division of Enforcement’s “Off-Channel Communication Initiative.” Off-channel communications can include communications conducted on widely used messaging platforms or texting platforms. The BD firms violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-4(b)(4) ........ Broadly, these statutes and rules require that broker-dealers keep certain books and records relating to their businesses, and investment advisers keep certain books and records relating to investment advice provided to clients.These settlements are the latest batch of settlements in the SEC’s ongoing focus on off-channel communications, such as text messages, WhatsApp, Discord, and other third-party applications, by personnel of regulated firms. Employees of the BD firms communicated through personal text messages about the business of their employers, and employees of IA firms sent and received off-channel communications related to recommendations made or proposed to be made, and advice given or proposed to be given. None of the firms maintained or preserved the substantial majority of these off-channel communications. As a result, the off-channel communications could not be captured and maintained as required by the books and records rules applicable to the firms. Examples of off-channel communications from the orders include: -A VP of a BD firm exchanging numerous off-channel messages with at least six colleagues, including junior employees under their supervision. These messages related to the broker-dealer’s business. -A BD firm VP exchanging numerous off-channel messages with at least three colleagues and at least one external contact in the securities industry, relating to the BD firm’s business. -A senior managing director of a BD firm exchanging numerous off-channel business-related messages with at least 10 colleagues, more than 50 customers, investors, or other market participants, and with six individuals at other financial firms. -A managing partner of an IA firm exchanging off-channel messages with colleagues and other external contacts in the securities industry. These messages related to investment advice proposed to be given to advisory clients. -A firm personnel exchanging off-channel messages discussing an investment trading strategy for an advisory client’s account. https://buff.ly/3SNAG0O #SVVG #SEC

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Federal regulators' crackdown on the off-channel use of WhatsApp and other ephemeral messaging tools, which has yielded more than $3 billion in fines and spurred endless consternation in the financial services industry, is likely headed for the trash heap, regulatory attorneys say. The U.S. Securities and Exchange Commission and the Commodities Futures Trading Commission have fined more than 100 investment advisers and broker-dealers over the past three years, with the largest players, including Goldman Sachs, JPMorgan Chase & Co. and Wells Fargo, anteing up $200 million apiece. The regulators zinged the companies for failing to preserve text messages between employees and customers via phone apps outside the communication channels investment firms normally monitor. Despite the headline-grabbing size of the penalties, and the deluge of training programs firms have launched to bolster compliance, use of the apps remains pervasive. But the enforcement spree, like many of SEC Chair Gary Gensler's highest-profile priorities, is premised on novel legal theories. Regulatory attorneys predict that whoever incoming President Donald Trump appoints to succeed Gensler as chair will abandon the boundary-pushing and focus on issues affecting everyday investors. “All indications are that the SEC’s ‘sweep’ regarding off-channel communications will come to an abrupt end once Trump’s appointees take the reins at the SEC," said David Oliwenstein, a securities enforcement and white-collar defense partner at Pillsbury Winthrop Shaw Pittman. “I suspect there are some legacy cases that are in the pipeline that the SEC staff will try to finalize before new leadership is appointed, but that should mark the end of the sweep.” Buttressing that view is the fact that the two Republicans on the five-person commission—Hester Peirce and Mark Uyeda, both of whom are considered potential successors to Gensler—have criticized the off-channel probe, including the size of the fines and the lack of "an achievable path to compliance." In a statement released in September, Peirce and Uyeda noted that the document-retention rules that the SEC is wielding in its off-channel communications crackdown were adopted in 1997 and “are a product of simpler times" and need to be modernized. "Even well-intentioned firms could find themselves in the Commission’s enforcement queue time and again," they said. Full story from James Palmer: https://lnkd.in/eiJAFdQE

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RIAs: you're not going to want to miss this piece from Mayer Brown! https://lnkd.in/ewSiMsnr Bottom line: the SEC recently brought its first enforcement action against a standalone SEC-registered investment adviser for violations related to off-channel communications. Almost 3 billion dollars of fines in, it's clear that RIAs are next on the SEC's target list. To help RIAs prepare for what's coming, we wrote this guide: https://lnkd.in/evdybPP2

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U.S. Securities and Exchange Commission and Exchange Commission - Cease and Desist Order Against Farnham Fisher Collins, dba Collins Capital Management - Subject - Custody Rule Violations - Fined - $65,000 This proceeding arises out of the failure of former registered investment adviser Collins Capital Management (“CCM”), an unincorporated sole-proprietorship of Farnham Fisher Collins (“Collins”), to comply with the independent verification requirement for client funds and securities for which it had custody for the period of at least 2012 through 2023, in violation of Section 206(4) of the Advisers Act and Rule 206(4)-2 thereunder, commonly referred to as the “Custody Rule.” 2. Respondent also failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder with regard to client accounts of which it had custody, in violation of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.  "Red-flags" existed in 27% of the operational risk conditions Convergence Inc measured in Collins during the infraction period including our favorite, the conflicted Chief Compliance Officer. 35% of the 14 Compliance functions tested had red flags. Question for #investors, would you have invested with Colony if you knew these red flags existed at the time? https://lnkd.in/dvn8NauJ #hedgefunds #privateequity #realestate #duediligence #riskmanagement #forensicaccouting #compliance #rias #fundadministrators #auditors #datascience #AI #datascience #ODD

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Is the SPAC IPO era coming to an end? With new SEC regulations on the horizon, the once-popular shortcut to public markets faces a reckoning, signaling a potential shift back to traditional IPOs. Bryan Isaac Schild provides an overview of the SPAC IPO era and comments on its potential future given the new regulations. Read the full article here: https://lnkd.in/g9B2eWs5

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Andreessen Horowitz (a16z) released its "State of Crypto 2024" report today...yes, crypto is still alive and well! Key takeaways: 1. Dramatic increase in blockchain activity, with 220 million addresses interacting with the technology at least once in September, triple the number in late 2023; 2. Crypto has become a key political issue ahead of the U.S. election; 3. Stablecoins have found product-market fit - become crypto's "killer app"; 4. Infrastructure improvements have increased capacity and drastically reduced transactions costs; 5. DeFi remains popular — and it’s growing; 6. Crypto could solve some of AI’s most pressing challenges; and 7. More scalable infrastructure has unlocked new onchain applications. https://lnkd.in/gBnMgH7q  #crypto #blockchain #token #law #securities #cryptocurrency #tokenize #stablecoin #investment #DeFi #regulatory #AI

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Crusoe, a startup transitioning from crypto to AI infrastructure, has raised $686M of an $818M funding goal, as per an SEC filing. This would bring its total funding to ~$1.5B in equity and debt. Key highlights: - Investors include Founders Fund and Felicis Ventures. - Reportedly eyeing a valuation surpassing $3B, doubling its prior valuation. - Recent $3.4B joint venture with Blue Owl Capital to build a Texas data center leased to Oracle, Microsoft, and OpenAI. For the latest secondary coverage and trading SaxonWeber | ShareWell #secondaries #saxonweber

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Replay: "Financial and Management Accounting: A Symbiotic Relationship." https://lnkd.in/gFjH4Cf7 Want to know how the U.S. Patents and Trademark Office calculates profitability and fee prices on a quarterly basis? Lim Vermeer a consultant for the USPTO joined Sander den Hartog, CEO of CostPerform, and PACE for the webinar "Financial and Management Accounting: A Symbiotic Relationship." It's widely understood that profitability modeling should be rooted in cause-and-effect analysis. Similarly, financial accounting typically offers a snapshot of the present rather than facilitating scenario analysis or "what-if" scenarios. Consequently, conventional wisdom has advised against conflating financial accounting with management accounting. However, in this webinar, Sander challenged this theoretical dogma and demonstrated how CostPerform assists many of their clients in establishing a tangible link between financial accounting and management accounting within their cost and profitability modeling processes. CostPerform is a valued GOLD sponsor for the Profits+ 2024 Virtual Conference and will be joining us for a different presentation during the conference. Replay here: https://lnkd.in/gFjH4Cf7 To share this webinar with your followers, please leave a comment, like, and repost it. Have you signed up for Profits+ Virtual Conference yet? Get the link in my bio. Only $49.50 for members extended until June 9th. --------------- ▪ Follow me 🚶‍♀️🚶🚶‍♀️🚶 for more insights ▪ Join 🤝 the PACE forum for discussion - (Linktree in my profile) ▪ Click the 🔔 to get notified of new posts (top right of my profile) ▪ Subscribe 🖊 to my monthly newsletter #financialaccounting #webinar #accountingandaccountants Erik Hooijer Raef Lawson Gary Kapanowski, MBA, CLSSMBB

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Nicolle Lafosse, Esq., of counsel at Diaz Reus in Miami, specializes in technology law, including blockchain matters, and is not involved in the case. She said there are different reasons and implications for someone not wanting to register digital assets as a security, such as a business becoming synonymous with the traditional market and causing the “hype to die down.” #diazreusinternationallawfirm #diazreus #lawfirm #lawyers #attorney #miami #newyorklawjournal #uslawfirm #NFT #NFTrestaurant

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Yet more proverbial creep, creep, creep, as I’ve written on on numerous occasions on this same platform, regarding the oncoming avalanche towards a globally coordinated system - superstructure - of regulations for the “crypto” space. There will be lost degrees of freedom as a result. That, in turn, has implications for privacy or, perhaps more pointedly, anonymity of & behind complex transactions &/or transfers, remittances, etc. New forms of “money”, if one chooses to use such equating language, will be accompanied by & with new forms of regulation. And these new regulations will be carefully coordinated across the globe with all its varying governmental regimes. This is an inevitability, rightly or wrongly: it’s also a necessity for fairly obvious reasons that need not be enumerated here.

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The total fines imposed by the SEC and CFTC for violations associated with firms’ failure to monitor and capture communications by employees on unapproved devices and systems (off-channel communications) are approaching $3 billion. The SEC recently resolved enforcement proceedings involving off-channel communications against 12 broker-dealers and four affiliated investment advisers. The resolutions require the 16 respondents to pay more than $81 million aggregate in civil penalties and retain compliance consultants to review their electronic communications practices. As in prior resolutions of off-channel communications matters, the respondents all admitted the facts alleged by the SEC and acknowledged that they violated the federal securities laws. This article analyzes the latest round of settlements. #HFLR #offchannelcommunications #recordkeeping https://lnkd.in/efmf8JjY

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A recent Texas court ruling dismissed ConsenSys’ claims regarding MetaMask and staking products, citing that the SEC’s actions are not final. As the crypto industry faces regulatory challenges, ConsenSys continues to lead with innovation and adaptability. With Ethereum ETFs now approved, the blockchain landscape is evolving at a rapid pace! 🌍✨ #BlockchainLaw #CryptoRegulation #ConsenSys #Ethereum https://lnkd.in/gbY-exp7

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