Mar. 25, 2021

The New Marketing Rule: Next Steps for Legal and Compliance (Part Two of Two)

The advertising rule, Rule 206(4)‑1 under the Investment Advisers Act of 1940 (Advisers Act), and the cash solicitation rule, Rule 206(4)‑3 under the Advisers Act, have existed – largely unchanged – for decades. Compliance with those rules has proven to be challenging for private fund managers. In response to near-universal agreement that the advertising and cash solicitation rules need a modern makeover, the SEC recently issued a new marketing rule (Marketing Rule), which amends the existing advertising rule and replaces the cash solicitation rule. It also amends Rule 204‑2 (the books and records rule) and Form ADV. This two-part series examines the Marketing Rule through the eyes of private fund managers, and this second article spells out the next steps for managers’ legal and compliance departments. The first article examined important changes made to the originally proposed amendments and provided key takeaways for private fund managers. For a look at the originally proposed changes to the advertising rule, see our two-part series: “Expanded Definition of Advertisement” (Apr. 2, 2020); and “‘Fair and Balanced’ Standard and Performance” (Apr. 9, 2020).

Critical Employment Law Considerations for Office Reopenings

With the continuing rollout of vaccines and more widespread adoption of preventive measures, there appears to be some light at the end of the coronavirus tunnel. Employers considering bringing employees back into physical office environments face a disparate array of federal, state and local rules and guidance affecting workplace safety and operations. To help navigate those treacherous waters, a recent Seward & Kissel program examined the current federal, state and local legal landscape; screening, testing and response protocols; vaccinations; employee reluctance to return to the office; and workplace claims and litigation. The program featured partners Mark D. Kotwick and Anne C. Patin, along with counsel Julia C. Spivack. This article examines the key takeaways from their presentation. See “Regulatory and Employment Concerns for Managers Reopening Their Offices” (Aug. 6, 2020).

How to Prevent and Handle Disputes Over Ransomware Insurance Claims

Ransomware ballooned as a threat in 2020, with ransom demands dramatically rising; attacks growing more frequent; and nearly half of all extortionists stealing data or destroying backups on top of paralyzing computers. Insurers are scrambling to handle the volume of claims and the increase in payout amounts. Facing losses from ransomware coverage, they are more aggressively challenging policyholders on claims. That pushback includes insurers contesting victim firms’ submitted business losses and IT damage and sometimes seeking privileged materials about the firm’s compliance efforts, reported panelists at a recent Incident Response Forum session. Insurers have also intensified demands that policyholding firms improve their cybersecurity controls, said Acrisure’s national cyber risk practice leader Adam Abresch. This article distills the insights offered by Abresch and other cyber insurance leaders during the panel, as well as in our conversations with them, including questions that firms should ask insurers about coverage before and during ransomware incidents; how to navigate claims negotiations; and how insurers have increased scrutiny of firms’ ransomware prevention efforts. See “Identifying and Preventing Ransomware Attacks” (Oct. 15, 2020).

Preserving Privilege for In‑House Counsel: Internal Investigations and Depositions (Part Two of Two)

Internal investigations involve activities that raise a host of privilege concerns for in-house counsel, including hiring experts, interviewing current and former employees and disclosure to regulators. This second article in our two-part series exploring the takeaways from a recent Strafford panel covers how privilege can be maintained in internal investigations and how to prepare when a litigant seeks to depose in-house counsel. The program featured Kimberly M. Ingram, associate at Bradley Arant; Kenneth E. McKay, shareholder at Baker Donelson; and Kan M. Nawaday, partner at Venable. The first article addressed best practices when communicating with in-house counsel and establishing privilege, as well as how to handle common privilege concerns, such as waivers, auditor reports and mergers. See “D.C. Circuit Confirms Applicability of Attorney-Client Privilege to Internal Investigations” (Aug. 7, 2014).

Chief of SEC’s Whistleblower Office Discusses Program’s Continuing Success After Its First Decade

The SEC’s whistleblower program is run by the Office of the Whistleblower (OWB) within the Division of Enforcement. Jane Norberg, Chief of the OWB, has been with that office since its creation. At a recent SCCE event, Norberg and Nikkia M. Wharton, senior counsel in the SEC Division of Enforcement, examined the growth of the whistleblower program over the past decade; its record number of tips and awards in fiscal year 2020; ways firms can use internal reporting to mitigate whistleblower risk; and the critical anti-retaliation protections afforded to whistleblowers. This article discusses the key takeaways from the program. See “SEC Annual Report Highlights Pandemic Response, Enforcement Focus Areas and Whistleblower Program Success” (Dec. 10, 2020).