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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

April 22, 2013

By THE INVESTMENT MANAGEMENT PRACTICE

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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Contributors

Image: Michael R Rosella
Michael R Rosella
Partner, Corporate Department
Image: Arthur L Zwickel
Arthur L Zwickel
Partner, Corporate Department
Image: Christian Parker
Christian Parker
Partner, Corporate Department
Image: David A Hearth
David A Hearth
Partner, Corporate Department