Sep. 3, 2020

Proxy Rules Now Apply to Proxy Voting Advice Businesses

On June 22, 2020, the SEC adopted final rules (New Rules) regarding proxy voting advisory businesses. Under the New Rules, proxy voting advice constitutes a solicitation. According to the SEC press release announcing the New Rules, they are “designed to ensure that clients of proxy voting advice businesses have reasonable and timely access to more transparent, accurate and complete information on which to make voting decisions.” To better understand the purpose of the New Rules and their expected implications for the private funds industry, the Hedge Fund Law Report recently spoke with Kleinberg Kaplan partner Christopher P. Davis, who represents activist shareholders. For commentary from other Kleinberg Kaplan partners, see our two-part series “Navigating Prime Brokerage Agreements, Swaps and Repos During the Coronavirus Crisis”: Part One (Jun. 18, 2020); and Part Two (Jun. 25, 2020).

Fine‑Tuning Surveillance to Mitigate Heightened Insider Trading Risk

The dramatically expanded work-from-home environment, extreme market volatility and the rush to develop vaccines resulting from the ongoing coronavirus pandemic have increased the risk of misuse of material nonpublic information, insider trading and other market abuse. Regulators are keenly focused on that elevated risk. To help advisers mitigate that enhanced risk, a recent ACA Compliance Group (ACA) program surveyed the current regulatory, examination and enforcement landscape; addressed how advisers can ensure that their surveillance and monitoring procedures are sufficient to address the evolving environment; and discussed other recent compliance concerns. The program featured Carlo di Florio, partner and chief services officer at ACA and former director of the SEC’s Office of Compliance Inspections and Examinations; Flavia Lamb, director at ACA; Michael Lehman, partner at ACA Technology Solutions; and Daniel M. Hawke, partner at Arnold & Porter, former chief of the SEC Market Abuse Unit and Director of the SEC’s Philadelphia Regional Office. This article presents the key takeaways from the program. For more from ACA, see “ACA Briefing: Regulatory Responses to Coronavirus Pandemic and Best Practices for Business Continuity and Compliance” (Apr. 16, 2020).

A Look at KPMG’s Evolving Asset Management Regulation Report: Pandemic’s Effect on Regulation, Operational Resilience, AML and Fiduciary Duty (Part One of Two)

KPMG recently released the tenth edition of its Evolving Asset Management Regulation report (Report), which surveys the current state of, and changes in, regulations around the globe that affect asset managers. “The regulatory perimeter is expanding,” survey author Julie Patterson, KPMG head of asset management, regulatory change, financial services risk and regulatory insight center, told the Hedge Fund Law Report. Growing numbers of jurisdictions are regulating the activities of private fund managers. In addition, the coronavirus pandemic has fed concerns that investment funds and investment management activities give rise to systemic risk. Consequently, “managers of private funds are increasingly under scrutiny,” she observed. This two-part series discusses the key takeaways from the Report, with additional insights from Patterson. This first article covers the Report’s findings on the impact of the pandemic on regulation; liquidity risk, valuation and leverage; operational resiliency; anti-money laundering; and fiduciary duty. The second article will review fee and expense disclosures; the end of LIBOR; capital markets rules; responsible investing; new investment vehicles and broadening investor base; and market access issues. For coverage of a KPMG and CREATE-Research Survey on how alternative investment managers can avoid becoming digital dinosaurs, see our two-part series: “How Digitization May Transform the Industry” (Mar. 1, 2018); and “How Private Fund Managers Are Entering the Digital Age” (Mar. 8, 2018).

Recently Added Four‑Person King & Spalding Team Offers Industry Perspectives

A four-person team of complex commercial litigators – consisting of Damien Marshall, Andrew Z. Michaelson, Leigh M. Nathanson and Laura Harris – has joined King & Spalding. Michaelson will work in the firm’s government matters practice, while the others will join the trial and global disputes group. In connection with their move, the team shared their thoughts on insider trading, SEC inquiries, the CFTC’s relevance, due diligence, the LIBOR transition and cryptocurrencies. For a panel moderated by another King & Spalding partner, see “Present and Former SEC Attorneys and Defense Counsel Discuss Cyber Disclosure and Enforcement” (Dec. 19, 2019).