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OCIE Issues Risk Alert on Misleading Advertising Practices 09/22/2017

Posted by Morse Barnes-Brown Pendleton in Financial Services, Private Investment Funds & Advisers.
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JHW Headshot Photo 2016 (M0990045xB1386)By: Josh Watson

The SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a risk alert on September 14, 2017 identifying misleading advertising practices that examiners have found during examinations of registered investment advisers.

The misleading practices identified in the alert are those that are widely-known to be misleading. For example: (1) Presenting performance results on a gross basis, rather than a net-to-investor basis; (2) Presenting profitable investments without disclosing unprofitable investments made during the same time period; and (3) Presenting hypothetical and back-tested performance results without disclosing other information that an investor would need to evaluate the relevance of the results.

The fact that OCIE issued a risk alert on this topic suggests that OCIE may be seeing an uptick in misleading advertising practices. Having now been warned, advisers should evaluate whether their advertising practices comply with regulatory and fiduciary requirements, and whether they have adequate procedures in place to ensure continued compliance with these requirements.

For more information, read the full alert.

Attack of the Indirect Investor 09/21/2017

Posted by Morse Barnes-Brown Pendleton in Attorney News, Financial Services, Private Investment Funds & Advisers.
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JHW Headshot Photo 2016 (M0990045xB1386)A company’s indirect investors may sue the company and its principals for fraud, according to a recent federal court ruling in Robert Colman et al. v. Theranos Inc. et al. Private funds attorney Josh Watson discusses the case in his article “Attack of the Indirect Investor.” He explains that investment managers who syndicate investment opportunities through single purpose vehicles (SPVs) should be concerned about the ruling because it undermines their control over potential disputes with portfolio companies and their relationships with portfolio company management.

Read the full article on our website. For more information, please contact Josh Watson or a member of our PIFA practice.

Josh Watson Moderating Private Equity and VC Funds Program at ABA Business Law Section Annual Meeting 09/14/2017

Posted by Morse Barnes-Brown Pendleton in Attorney News, Events, Financial Services, Private Investment Funds & Advisers, Venture Capital & Private Equity.
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JHW Headshot Photo 2016 (M0990045xB1386)At this year’s ABA Business Law Section Annual Meeting, private funds attorney Josh Watson will serve as the program chair and moderator for the program “End of Life Issues for Private Equity and Venture Capital Funds.” The program will be presented by the Private Equity and Venture Capital committee and will cover issues faced by private funds as they approach the end of their life spans. Topics include term extensions, secondary sales, restructurings, and conflicts of interest.

The program will be held this Friday, September 15 at 8am. For more information, view the meeting guide.

The Risks of Using Finders and Unregistered Brokers 06/21/2017

Posted by Morse Barnes-Brown Pendleton in Attorney News, Corporate, Financial Services, Private Investment Funds & Advisers.
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JHW Headshot Photo 2016 (M0990045xB1386)Private fund managers often use placement agents, finders, and other intermediaries to help raise capital for their investment funds. Using an intermediary that has failed to register as a broker-dealer, however, is fraught with risk. In his article “The Risks of Using Finders and Unregistered Brokers”, private funds attorney Josh Watson cautions against using unregistered brokers and describes how to determine when an intermediary should be registered.

Read the full article on our website. For more information, please contact Josh Watson or a member of our PIFA practice.

Registration Exemptions for Investment Advisers 06/08/2017

Posted by Morse Barnes-Brown Pendleton in Attorney News, Corporate, Financial Services, MBBP news, Private Investment Funds & Advisers, Venture Capital & Private Equity.
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JHW Headshot Photo 2016 (M0990045xB1386)When may an investment adviser avoid registering with the Securities and Exchange Commission? Private funds attorney Josh Watson answers this question in his article “Registration Exemptions for Investment Advisers” that summarizes the requirements of two registration exemptions that are available to managers of private investment funds.

To learn about the two registration exemptions read the full article on our website. For more information, please contact Josh Watson or a member of our PIFA practice.

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