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    Jul. 16, 2026

CFTC’s New Cooperation Policy Is a Break From the Past (Part Two of Two)

The new policy (Policy) announced by the CFTC’s Division of Enforcement on May 19, 2026, is designed to incentivize self-reporting and cooperation and to establish a clear path toward declination. However, more guidance is needed to alleviate doubts as to the ultimate benefits of self-reporting, according to legal experts interviewed by the Hedge Fund Law Report. In the absence of further clarity, parties should not automatically rush to self-report when they become aware of violations or assume they can easily secure a declination. This second article in our two-part series compares the Policy to the superseded February 2025 Enforcement Advisory and to other agencies’ cooperation policies; assesses its potential impact; and provides practical takeaways. The first article summarized the Policy and its cooperation safe harbors. See our two-part series “Why, When and How Fund Managers Should Self-Report Violations to the SEC”: Part One (Jan. 10, 2019); and Part Two (Jan. 17, 2019).

Insider Trading Enforcement Moves Beyond Equities

Insider trading remains a leading enforcement priority even as the conduct migrates far beyond the classic earnings-and-equities case. Senior government officials have signaled that the area is a continuing focus, and the cases are reaching new asset classes, new markets and new detection technologies. A panel at the Securities Enforcement Forum West 2026, held May 21, 2026, in San Francisco, focused on those developments and what they mean for fund managers. The panel featured Martine M. Beamon, partner and co-head of the white collar defense and investigations group at Davis Polk; Lloyd Farnham, chief of the corporate and securities fraud section of the U.S. Attorney’s Office for the Northern District of California; Teresa Goody Guillén, partner at Bellementis PLLC; Fitzann Reid, GC and CCO of Hunterbrook Media; and Jason Spitalnick, partner at Snell & Wilmer. Farnham, Reid and Spitalnick previously served at the SEC. This article examines the panelists’ key insights. See “2026 Securities Enforcement Forum Panel Discusses Current Enforcement Climate“ (Mar. 12, 2026); and “What Can Hedge Fund Managers Expect From the SEC in 2026?” (Jan. 29, 2026).

ACA Study Finds Widespread, but Limited, Implementation of AI

Although it may seem that artificial intelligence (AI) is being deployed and embedded across the entire economy, uptake by financial services firms has been modest. “While most firms have begun to engage with AI, relatively few have translated that engagement into structured, scalable deployment,” according to ACA Group’s new report, State of AI in Compliance and Operations (Report), which is based on a study it conducted in March 2026. Most firms in the study are using AI to some extent, more often in compliance workflows than in operations. This article summarizes the key findings from the Report and the insights from a related presentation by ACA Group on agentic AI, AI-related risks and developing robust AI governance. See “The Core Benefits and Burdens of AI Use in Financial Services” (Apr. 23, 2026).

How to Develop a Robust Due Diligence Program for Retail Products

Although private fund managers typically do not interact directly with retail investors, they may have broker-dealer affiliates that do or may choose to offer a registered product. Also, future changes to the definition of accredited investor and/or the Regulation D private offering regime could increase managers’ direct access to such investors. As both regulators and private fund managers warm to the idea of making private market investments accessible to retail investors, managers face new and unique challenges they will need to address in their respective compliance programs. A program presented by the National Society of Compliance Professionals examined due diligence requirements – and the associated regulatory concerns – when offering investment products to retail investors, including the fiduciary obligation to ensure investments are appropriate for each client. The program featured Miriam Lefkowitz, a compliance consultant and securities regulatory attorney; Ana D. Petrovic, director at Kroll; and James Sommerfield, Jr., senior compliance officer and principal at Wintrust Wealth Management. This article synthesizes their insights. See our two-part series on the retailization of private funds: “Incremental Changes Signal SEC Support” (Aug. 14, 2025); and “Practical Consequences” (Aug. 28, 2025).

ESMA Issues Liquidity Management Guidelines for AIFs and UCITS Funds

In early 2024, the E.U. adopted final amendments (Amendments) to the Alternative Investment Fund Managers Directive and the Undertakings for the Collective Investment in Transferable Securities (UCITS) Directive. One of the purposes of the Amendments is to facilitate fund managers’ use of liquidity management tools (LMTs) across the E.U. The Amendments require managers of open-end alternative investment funds and UCITS funds to use at least two LMTs from a list of available tools. On March 12, 2026, the European Securities and Markets Authority issued guidance (Guidance) on the selection and implementation of LMTs by such managers. E.U. Member States’ competent authorities must incorporate the Guidelines into their regulatory and supervisory regimes. This article parses the underlying rules and the Guidance. See “ESG Triggers, Liquidity Management and Other Ways the Russia/Ukraine War Is Affecting Hedge Fund Investments (Part Two of Two)” (Jul. 28, 2022).

Attorney Trio Joins Skadden’s Investment Management Group

Skadden announced that Robert Griffin, Kapil Vishnu Pandit and Skye Smith have joined the firm as partners in the investment management group. Griffin and Smith will be based in the firm’s office in the Abu Dhabi Global Market, while Pandit will work out of its Washington, D.C., office. Their combined practices span hedge funds, private equity, credit funds, real estate funds, funds of funds, secondaries transactions, continuation vehicles, co-investments and bespoke investment arrangements. For insights from other Skadden partners, see “Emerging Technology Risks for Private Fund Managers” (Jan. 29, 2026); and “Navigating Ransomware’s Challenges” (Sep. 26, 2024).

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