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    Sep. 10, 2026

FINRA Report Urges Stronger Due Process and Transparency

On June 30, 2026, as a step in its ongoing FINRA Forward project, FINRA released a report (Report) by two unaffiliated enforcement experts, Professor Paul R. Eckert of William & Mary Law School and former SEC Commissioner Troy A. Paredes of Paredes Strategies, presenting their assessments of FINRA’s enforcement role and their recommendations for making the agency more effective and transparent. If adopted as written, certain recommendations would significantly tilt the scales in favor of greater due process for respondent firms. Among its proposals are establishing a forum to hear challenges to Rule 8210 information requests; expanding use of the Wells process; setting a statute of limitations on enforcement actions; empowering external reviewers of the agency; and implementing other measures to bolster the rights of respondents and facilitate the more collaborative, transparent and efficient resolution of enforcement matters. This article summarizes the Report’s key recommendations, considers their potential impact on registrants, examines how they will bring certain FINRA practices more in line with the SEC and offers practical takeaways, with commentary from former FINRA officials and legal experts. See “SEC, CFTC and FINRA Division Heads Discuss Enforcement Outlook” (Apr. 24, 2025).

Former SEC and CFTC Officials Unpack the 2026 Enforcement Landscape

Leadership transitions at regulatory agencies are inevitable following a change in presidential administration. In recent years, however, such turnovers have brought about wholesale reversals of enforcement approaches, policies and focus areas. At the May 2026 White Collar Crime Conference presented by the New York City Bar Association, blue-ribbon panels of former enforcement directors from the SEC’s Division of Enforcement and the CFTC Division of Enforcement examined the significant changes and current enforcement landscape at each agency. They discussed the impact of staffing cuts, the SEC’s “back to basics” enforcement priorities, attempts to stop so-called “regulation by enforcement,” the impact of two Supreme Court decisions in 2024 on enforcement activity and revisions to the SEC enforcement manual and the CFTC’s policy on self-reporting, remediation and cooperation. This article synthesizes their observations. See “SEC Speaks: 2026 Priorities, Enforcement, Collaboration, Innovation, Crypto & Retailization” (May 21, 2026).

Seed Deal Study Finds Maturing Market

In July 2026, Seward & Kissel released the 12th annual iteration of its seed transaction deal points study (Study). The Study covers seed deal activity during 2025. “The biggest thing we noticed – and at this point have been tracking for a few years – is a flattening of the trendlines for many key provisions, such as lockup duration,” which could be a reflection of equilibrium in the market, C. Gerhard Anderson, III, partner at Seward & Kissel and lead author of the Study, told the Hedge Fund Law Report. As in prior years, the Study covers key seed deal terms, including working capital support; revenue share structures, sunsets and buyouts; lockups; non-compete and other key person provisions; and other terms designed to protect seeders’ economic interests. This article parses the Study, with additional commentary from Anderson. See “Seed Deal Study: Alignment Between Seeders and Managers and Seeders and Other Investors” (Aug. 14, 2025).

U.S. Taxation Concerns for Private Funds and Their Investors Following the One Big Beautiful Bill Act (Part Two of Two)

More than a year ago, the One Big Beautiful Bill Act (OBBBA) took effect, making significant changes to the U.S. Internal Revenue Code (IRC). Those changes and their impact on private fund managers and their investors were the focus of a BARBRI program featuring Kleinberg Kaplan partners Philip S. Gross and Eli A. Shalam and Eisner Advisory Group LLC partner Marc Stahl. This second article in a two-part series summarizes their comments on the fundamental tax-related goals of U.S. taxable investors, non-taxable investors and foreign investors, as well as tax-related fund structuring issues for management and performance fees. The first article covered their discussion on taxation of performance allocations as well as the IRC provisions changed by OBBBA affecting management fee waivers; deductions and loss limitations; gains on disposition of qualified small business stock; and income from controlled foreign corporations. See “Does the U.K.’s New Carried Interest Tax Regime Bring Clarity for Hedge Funds?” (Oct. 9, 2025).

SDNY Jury Rules for Hedge Fund Defendants in Short-Swing Profit Lawsuit

On June 18, 2026, a jury in the Southern District of New York ruled in favor of the hedge fund defendants (Defendants) in Augenbaum v. Anson Investments Master Fund LLP et al., a lawsuit filed in January 2022 over trading activity. The plaintiff, investor Todd Augenbaum, had accused the hedge funds of violating Section 16(b) of the Securities Exchange Act of 1934, which requires purchasers to disgorge all profits realized through non-exempt matching purchases and sales in a six-month period and, in theory, prevents profit-taking through “short-swing” insider trading. This article summarizes the complaint and the jury’s verdict and examines the alleged securities law violations, with commentary from the Defendants’ lead counsel in the litigation and others. See “How Fund Managers Can Navigate Sections 13(d) and 16 of the Exchange Act” (Feb. 28, 2019).

Alston & Bird Adds New Counsel in New York

Robert Blumenfeld has joined the New York office of Alston & Bird as counsel. He advises sponsors and managers across the investment fund lifecycle, with a focus on the formation, operation and governance of hedge funds and private equity funds. For insights from other Alston & Bird attorneys, see “SEC 2026 Exam Priorities: Retail Investor Protection In, Crypto Out” (Feb. 12, 2026); and “SBAI’s New Standards and Guidance on Valuing Illiquid Assets” (Aug. 28, 2025).

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