Foley Hoag LLP

SUMMARY

The Massachusetts Securities Division (the “Division”) has adopted new regulations related to the registration of investment advisers. The new regulations are effective as of February 3, 2012, but will not be enforced by the Division until August 3, 2012.

The regulations, which were adopted in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) passed by Congress in July 2010, include the following key provisions: (i) substantial changes to the definition of “institutional buyer”; (ii) the establishment of a private fund adviser exemption from registration; and (iii) amendments to the requirements for advisers with discretion over, or custody of, client funds.  [more...]

SUMMARY

As the result of a recent amendment to the Cayman Islands Mutual Funds Law, master funds formed in the Cayman Islands may be required to register with the Cayman Islands Monetary Authority (CIMA). Prior to the passage of the Mutual Funds (Amendment) Bill 2011 (the “Amendment”) in December 2011, many master funds were exempt from registration with CIMA in reliance on an exception for funds with “not more than 15 investors”. With the passage of the Amendment, master funds will no longer be able to rely on this exception and clients now need to determine whether any Cayman Islands master funds in their master-feeder fund structures will be required to comply with the new registration and filing requirements.  [more...]

SUMMARY

The Massachusetts Securities Division (the “Division”) has adopted new regulations relating to the regulation of investment advisers. The new regulations will become effective on February 3, 2012, but will not be enforced by the Division until August 3, 2012, six months after the effective date.  [more...]

SUMMARY

Asset managers are reminded that The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) implemented a significant change in the approach taken under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), regarding the registration with the Securities and Exchange Commission (the “SEC”) of advisers to unregistered funds. This change reflects two fundamental alterations of basic regulatory philosophy: a determination that advisers to such funds must register with the Securities and Exchange Commission (the “SEC”) unless covered by a specific exemption from registration; and a greater reliance on state regulators to oversee advisers generally. The deadline for managers required to register with the SEC is March 30, 2012. In order to make certain that a registration is effective by March 30, managers should file an application with the SEC by February 14, 2012.  [more...]

SUMMARY

Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) set forth, among other regulatory changes, a revised net worth test for a natural person to qualify as an “accredited investor” for purposes of Regulation D under the Securities Act of 1933, as amended (the primary private placement exemption relied on by investment advisers managing private investment funds). The revised standard, which came into effect on July 21, 2010, requires such individual’s net worth or joint net worth with the spouse of that person, at the time of investment to be $1,000,000, excluding the value of the primary residence of such natural person.  [more...]

SUMMARY

Registered Investment Advisers who were registered as of December 31, 2010, and who have fiscal years ending December 31, 2010 through April 30, 2011 must deliver brochure supplements (Part 2B Form ADV) to existing clients by September 30, 2011. Advisers should already be delivering brochure supplements to new and prospective clients.

SUMMARY

On June 22, 2011, the Securities and Exchange Commission (“SEC”) released amendments to Rule 206(4)-5 (the “Rule”) under the Investment Advisers Act of 1940  (the "Advisers Act"), which places restrictions on political contributions by an investment advisor or its covered associates, and prohibits the engagement by an investment advisor of unregulated third party solicitors to solicit government entity clients on its behalf.

SUMMARY

At an open meeting of the Securities and Exchange Commission (the “SEC”) held earlier today, the SEC adopted final rules relating to the implementation of the changes to the registration requirements contained within the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC also extended the deadline by which currently unregistered advisers will need to comply with the new registration requirements until March 30, 2012.

Additional information regarding the details of the new rules will follow.

SUMMARY

In a release dated May 10, 2011, the Securities and Exchange Commission (the “SEC”) announced that, as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), it intends to issue an order that would adjust the dollar amount thresholds for “qualified clients” as defined under rule 205-3 of the Investment Advisers Act of 1940, as amended (“Advisers Act”). [more...]

SUMMARY

On May 27, 2011, new Rule 5131 ( New Issue Allocations and Distributions) of the Financial Industry Regulatory Authority, Inc. (“FINRA”) will go into effect. This new rule is intended to address certain abuses in the allocation and distribution of new issues and specifically prohibits, among other things, “spinning.” The full text of the rule can be found on the FINRA website. Rule 5131 does not replace the existing new issues rule (Rule 5130), but instead creates an additional set of requirements.  [more...]

SUMMARY

The Massachusetts Securities Division, under the direction of Secretary Galvin, has proposed new regulations relating to the regulation of investment advisers, including hedge fund managers. The proposed regulations are being issued in main part in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) passed by Congress in July 2010 and are intended to “promote consistency” between Massachusetts state requirements for registration and regulation of investment advisers and the federal requirements following passage of the Dodd-Frank Act.

SUMMARY

Secretary of the Commonwealth William Francis Galvin has proposed regulations to add conditions to the use of “matching or expert network services” by investment advisers which are registered in Massachusetts or operating in Massachusetts within an exemption from registration.

SUMMARY

In a letter dated April 8, 2011 to the President of the North American Securities Administrators Association, Inc., Robert E. Plaze, Associate Director of the Securities and Exchange Commission (“SEC”), indicated that the SEC will consider extending the deadlines by which certain advisers must register with the SEC, or switch from SEC to state registration, under the new provisions of the Dodd-Frank Wall Street Reform and Consumer Protect Act (the “Dodd-Frank Act”).  [more...]

SUMMARY

On February 4, 2011, the U.S. Court of Appeals for the District of Columbia Circuit rejected Full Value Advisors LLC’s challenge to Form 13F disclosure requirements. Full Value argued that the disclosure requirements amount to compelled speech in violation of the First Amendment and an uncompensated taking in violation of the Fifth Amendment. Full Value’s requests for exemption from and confidential treatment under Section 13(f) had previously been denied by the U.S. Securities and Exchange Commission. [more...]

SUMMARY

On January 26, 2011, as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the U.S. Commodity Futures Trading Commission (“CFTC”) and the U.S. Securities and Exchange Commission (“SEC”) jointly proposed new disclosure requirements for investment advisers to private funds. The proposed rules require certain information about private funds to be disclosed by electronically filing a new reporting form called “Form PF” with the SEC.  [more...]

SUMMARY

Exemptions Are Commonly Relied Upon By Investment Advisers to Hedge Funds and Other Private Funds

Elimination of Exemptions 

On January 26, 2011, the U.S. Commodity Futures Trading Commission (“CFTC”) proposed certain amendments to current CFTC rules, including the elimination of two widely used exemptions from commodity pool operator (“CPO”) registration. If adopted, the proposed amendments would have a significant impact on advisers to funds currently operated as “exempt commodity pools,” including many hedge funds. [more...]

SUMMARY

Annual Compliance Reviews

All investment advisers registered with the Securities and Exchange Commission (“SEC”) are required to review their compliance policies and procedures at least annually. Many advisers traditionally conduct this review in March of each year. [more...]

SUMMARY

On December 28, 2010, the Securities and Exchange Commission (the “SEC”) granted an extension to the deadline for complying with certain portions of the new Part 2, Form ADV requirements.

SUMMARY

The I.R.S. has recently issued its annual cost-of-living adjustments applicable in 2011 to qualified retirement (pension, profit-sharing, § 401(k), money purchase and stock bonus) plans. Generally, there has been such a low rate of inflation in the nation’s economy that many of these cost-of-living adjustments will remain unchanged.

SUMMARY

As the end of 2010 approaches and we receive numerous inquiries concerning developing hiring plans, I thought you might be especially interested to note some particulars about the Hiring Incentives to Restore Employment Act (the “HIRE Act”) which was enacted earlier this year to stimulate prompt hiring of workers by businesses.