OCIE 2019 Examination Priorities

Guest post by Pillsbury’s Investment Fund Law Team

In a press release issued by the Securities and Exchange Commission on December 20, 2018, the SEC’s Office of Compliance Inspections and Examinations (OCIE) announced its 2019 Examination Priorities.

This year’s examination priorities, although not exhaustive, are divided into 6 categories:

  1. Compliance and risk at registrants responsible for critical market infrastructure;
  2. Matters of importance to retail investors, including seniors and those saving for retirement;
  3. FINRA and MSRB;
  4. Digital assets;
  5. Cybersecurity; and
  6. Anti-money laundering programs.

Read the OCIE 2019 Examination Priorities in full HERE.

Pillsbury Winthrop Shaw Pittman LLP

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SEC Divisions’ Issue Public Statement on Digital Assets and ICOs, Echoing Recent Enforcement Actions

Guest post by  – Cleary Gottlieb Steen & Hamilton LLP

On November 16, 2018, the U.S. Securities and Exchange Commission (“SEC”) Division of Corporation Finance (“Corp. Fin.”), Division of Investment Management, and Division of Trading and Markets issued a joint public statement on “Digital Asset Securities Issuance and Trading.”  The public statement is the latest in the Divisions’—and the Commission’s—steady efforts to publicly outline and develop its analysis on the application of the federal securities laws to initial coin offerings (“ICOs”) and certain digital tokens.  These efforts have combined a series of enforcement proceedings with public statements by Chairman Jay Clayton and staff, including a more detailed statement of the SEC’s analytical approach in Corp. Fin. Director William Hinman’s speech on digital assets in June 2018.

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PE and VC Funds Suggested Responses to SEC Staff Comments

Joseph W. Bartlett

Andrew Bowden, Director, Office of Compliance Inspections and Examinations, gave a speech, May 6, 2014, on fund conflicts (https://www.sec.gov/news/speech/2014–spch05062014ab.html).  The members of the Fund Foundation Bar all snapped to attention and saluted.  Herewith a sample conflict policy for a venture capital fund and an Appendix to cover many of Bowden’s points.

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Hedge Funds Under Microscope by SEC

Guest post by Ildiko Duckor, Partner, Pillsbury Winthrop Shaw Pittman LLP

Ildiko Duckor, co-head of the Pillsbury’s Investment Funds & Investment Management practice, cautions that never before examined hedge funds should be on alert. She writes:

Earlier this month, the SEC announced the creation of its Office of Risk and Strategy  to operate within its Office of Compliance Inspections and Examinations (OCIE).  The new office will consolidate and streamline OCIE’s risk assessment, market surveillance, and quantitative analysis teams and provide operational risk management and organizational strategy for OCIE.

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SEC Enforcement Action Related to PE Fees and Expenses

Guest Post by James E. Anderson, Barry P. Barbash, Gordon R. Caplan, Scott A. Arenare, and Anne C. Choe – Willkie Farr & Gallagher LLP

An enforcement action brought by the Securities and Exchange Commission (the “SEC”) against three private equity fund advisers within The Blackstone Group represents a continuing regulatory focus on private equity fees and expenses. On October 7, 2015, the SEC charged Blackstone with failing to adequately disclose to its funds, and to fund investors prior to their commitment of capital, that (1) Blackstone had the authority to accelerate future monitoring fees and exercised that authority upon termination of monitoring agreements and (2) Blackstone had negotiated with its primary outside law firm a discount for external legal fees for the firm that was substantially greater than the discount received by the Blackstone funds. In settling the SEC’s action, Blackstone agreed to pay nearly $39 million, including a $10 million penalty. [1]

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