NEWSLETTER: While action from the SEC is predictably quiet this quarter, we’re working with a lot of our clients on building an underlying culture of compliance. They can be easy words to throw around, but not so easy to practically put into effect. Valerie Ruppel and Ryan Stibich talked through some practical tips in their webinar earlier today. If you missed it let us know and we can send a recording.
There has been some SEC activity this month – the publication of an FAQ to the Marketing Rule. Of course, like all staff guidance, the FAQs in themselves have no legal effect: they don’t change your obligations. But there are some interesting points to digest. For example, SEC staff noted that while the Marketing Rule does not prescribe a specific methodology or calculation for performance, in situations where gross and net performance returns are used by an investment adviser, net returns must be calculated “over the same time period and using the same type of return and methodology as gross performance.” You can read them in full here.
In this month’s newsletter we also reflect on the importance of remaining close to your accounting controls. External audits may both be necessary and crucial, but during exams the SEC often highlights the need to enhance internal monitoring of accounting functions for private funds.
We also report on another round of enforcements related to record keeping, and consider the degree to which early self-reporting can reduce the impact. Of course we’d always recommend transparency when something has gone wrong – but fines show that prevention is still preferable.
Finally, from FinCEN this month is a proposed rule aimed at enhancing anti-money laundering and counter-financing of terrorism measures. The measures would require significant changes so are worth understanding in detail during the consultation period.
Rebecca Thorpe
Chief Executive Officer
