The new SEC Chairman's principles, a Wyoming law's impact on mid-sized investment advisors, and more in this issue of Fund Forum

This issue of Venable's Fund Forum provides (i) an outline of the new SEC Chairman, Jay Clayton's, principles for his tenure, (ii) a new Wyoming law impacting SEC registration of mid-sized investment advisers, (iii) a summary of the NY OAG's resolution of an investigation into a New York-based hedge fund manager and (iv) an article analyzing the impact of the Ninth Circuit's recent holding on disregarded entities in a partnership.

SEC Chairman Outlines Principles Guiding His Chairmanship

In his first public speech (given at the Economic Club of New York on July 12, 2017), SEC Chairman Jay Clayton outlined the eight principles that would guide his tenure. In this article, we outline the principles and take particular note of certain areas in which he anticipates the application of these principles.

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Wyoming Law Prompts SEC to Update Mid-Sized Adviser Frequently Asked Questions

Wyoming recently enacted a state law regulating investment advisers with a principal office and place of business in that state. As a result, such an investment adviser may not register with the SEC unless it has more than $100 million in assets under management, advises a registered investment company, or is eligible to rely on one of the exemptions contained in rule 203A-2 under the Investment Advisers Act of 1940. Accordingly, the Division of Investment Management staff has updated the Frequently Asked Questions Regarding Mid-Sized Advisers to reflect the enactment of this Wyoming statute. Wyoming's law leaves only New York as a state in which a mid-sized adviser would not be subject to examination by the state securities authority and therefore would be required to register with the SEC. For more, see IM Information Update and the FAQs.

NY Attorney General: Hedge Fund Manager Violates New York’s Martin Act and Executive Law

Earlier this year, Attorney General Eric T. Schneiderman announced the resolution of an investigation into a New York–based hedge fund manager, which managed two hedge funds. The OAG alleged, among other things, certain disclosure failures in the funds' offering materials.

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Disregarded Entity Partners Raise Gummy-Bears for Tax Audit Risk Management

In June, the U.S. Court of Appeals for the Ninth Circuit held that a single-member LLC (disregarded entity) holding an interest in an LLC (treated as a partnership) was a "pass-thru" partner for purposes of the "small partnership" exception to the extended statute of limitations of partners under the partnership-level consolidated tax audit rule (known as the "Tax Equity and Fiscal Responsibility Act of 1982" (TEFRA)). This rule is in effect for taxable years beginning before 2018.

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