PE and VC Funds Suggested Responses to SEC Staff Comments

Joseph W. Bartlett, Counsel, Reitler Kailas & Rosenblatt LLC

Andrew Bowden, Director, Office of Compliance Inspections and Examinations, gave a speech, May 6, 2014, on fund conflicts (–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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