The SEC has carefully scrutinized fund managers’ disclosures to investors for years to ensure that managers are making required disclosures; those disclosures are accurate and complete; and they match managers’ actual operations. In addition, the SEC will raise an eyebrow, so to speak, if a manager gives certain information to some investors but not others – especially if that information gives those select investors a financial advantage. In today’s economic climate, managers should expect heightened scrutiny of any selective disclosures. The Hedge Fund Law Report recently spoke to Philip Moustakis, counsel at Seward & Kissel and former Senior Counsel in the SEC’s Division of Enforcement, about increases in investor inquiries during the pandemic; the factors managers should consider when deciding what information to provide to investors; practical steps managers can take to avoid pitfalls when responding to investor inquiries; the SEC’s focus on selective disclosures; and the importance of documenting all communications with investors. For additional insights from Moustakis, see “How Managers Can Navigate the Thin Line Between SEC Examinations and Enforcement
” (Nov. 14, 2019); and our two-part interview in which he discussed: “The Digital Assets Space
” (Mar. 7, 2019); and “Enforcement Trends and Whistleblowers
” (Mar. 14, 2019).