Compliance Corner Q2‑2021: Regulatory Filings and Other Considerations That Hedge Fund Managers Should Note in the Coming Quarter

Gary Gensler was recently sworn in as Chairman of the SEC, placing a veteran regulator and former Goldman Sachs partner in charge of overseeing the U.S. capital markets. Gensler’s background as the former Chair of the CFTC, along with his recent role researching and teaching blockchain technology and digital assets at MIT, may offer clues as to what to expect from his tenure at the SEC. He also oversaw significant structural changes in the derivatives market required by Dodd-Frank in response to the 2008 financial crisis – experience he is likely to revisit given recent events involving market participants’ use of leverage in the security-based swap markets. Through 2021, a key focus area for both the media and the SEC has been the trading of certain equities targeted by popular message boards. SEC investment adviser exams in that area have assessed, among other areas, risk management; liquidity; due diligence practices; trading operations and controls; electronic communications; and access person personal trading. Certain of the exam review areas also appear to fit in with the Division of Examinations’ 2021 examination priorities (Priorities). This sixteenth installment of the Hedge Fund Law Report’s quarterly compliance update, authored by consultants Joey Martinez, Dan Campbell, Julie Wersebe and Chris Ray of ACA Group (ACA), highlights upcoming filing deadlines and reporting requirements that fund managers should be aware of during the second quarter. This article also discusses the Priorities; increased SEC focus on environmental, social and governance issues; and enhanced regulatory interest in digital assets. For more from ACA, see our two-part series on a program that reviewed the SEC’s 2020 activity: “Challenges, Rulemaking and Guidance” (Feb. 4, 2021); and “Examination and Enforcement Trends” (Feb. 18, 2021).

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