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SEC Chief Counsel Cautions Newly Registered Private Fund Advisers on Broker-Dealer Registration Issues Relating to In-House Marketing and Other Activities

The Chief Counsel of the SEC’s Division of Trading and Markets confirms that the SEC staff continues to focus on issues relating to unregistered broker-dealers marketing private investment funds -- such as hedge funds, private equity funds and real estate funds -- that are advised by SEC-registered investment advisers. He noted issues arising in connection with the marketing efforts of in-house personnel of fund advisers, as well as a second concern, which may be more common with private equity fund and LBO fund managers, involving the receipt by the private fund adviser, its personnel, or its affiliates of transaction-based compensation for purported “investment banking” “consulting” or other broker activities relating to one or more of the fund’s portfolio companies.

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