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Your professionally curated research and reference resource fully integrating treatise and how-to guidance with underlying laws, rules, interpretations, and hundreds of sample documents.

New Marketing Rule Effective

The new marketing rule became effective on May 4. However, there is an 18 month transition period. So the drop dead compliance date is Nov. 4, 2022 Please refer to our collection of materials on the new rule in the adjoining News column for more information.

Adviser Regulatory & Compliance News

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Digital Assets Terminology Summary

October 21, 2021

The Cole Schotz law firm published a really helpful summary of key terms used re: digital assets. Please click the headline to this blurb to access the summary.

Proxy Reporting May Change

October 21, 2021

In late Sept., the SEC proposed changes to Form N-PX which would change proxy voting reporting requirements for funds. At the same time, the SEC proposed new Rule 14Ad-1 under the Exchange Act to require institutional investment managers, who are required to report on Form 13F, to disclose how they voted on executive compensation matters. Please click on the headline to this summary for additional materials.

Time to Reevaluate Your China Investments Disclosures?

September 24, 2021

Evergrande seems to be going under. Cryptocurrencies have been banned. The status of U.S. listed Chinese companies seems to be in question. For advisers investing in Chinese securities and other investments, this may be turning into treacherous ground. The SEC recently published an "Investor Bulletin: U.S.-Listed Companies Operating Chinese Businesses Through a VIE Structure" highlighting the challenges and issues of U.S. listed Chinese companies. If your adviser hasn't evaluated and rewritten its disclosures regarding Chinese investments, now is the time. Please click the headline to this summary to access the Investor Bulletin, which has a variety of additional resources.

SEC Brings Charges Against an Adviser for Failing to Address Conflicts of Interest

September 10, 2021

The SEC brought an enforcement action against Diastole Wealth Management, Inc. (Diastole) and Elizabeth Eden, its principal, for failing to adequately disclose conflicts of interest related to investments they managed for a private fund client. The SEC stated that Diastole and Eden invested certain of the private fund’s assets in a company that Eden’s son principally owned and operated. The fund’s limited partners were all also individual advisory clients, such that Diastole and Eden owed a fiduciary duty both to the fund and directly to the fund’s limited partners. However, the SEC stated that Diastole and Eden initially did not disclose that the fund had invested in Eden’s son’s company. Diastole and Eden also did not make adequate disclosures of material financial conflicts relating to the fund’s investments in Eden’s son’s company. For example, the SEC stated that Diastole and Eden did not disclose that fund investment amounts could and would be used to pay off loans Diastole had made to the son’s company. Diastole and Eden breached their fiduciary duties as investment advisers by making conflicted investments without disclosing material facts, and they also made certain misleading statements to investors in a pooled investment vehicle, all in violation of various provisions of the Advisers Act.

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