• |

    Jul. 29, 2021

Vaccines and Testing in the Post‑Pandemic Workplace: Understanding the Legal Framework and Making a Balanced Plan

As employees return to the physical workplace, there is a tension between fund managers’ responsibilities to keep workers safe and their legal obligation to protect workers’ privacy and personal data. This first article of a two-part series delves into the applicable privacy and employment laws, and it provides steps fund managers can take to find the right balance between privacy and safety when developing vaccine and testing policies. The second article will clarify what fund managers can ask and require of employees with respect to coronavirus testing and vaccination status, as well as what obligations they have when storing, accessing and disclosing coronavirus-related employee data. See our three-part series on how to facilitate a safe and privacy compliant return to work: “Relevant Laws and Guidance” (Jun. 18, 2020); “Policies and Protocols” (Jun. 25, 2020); and “Contact Tracing and Fund Manager Considerations” (Jul. 9, 2020).

Compliance Corner Q3‑2021: Regulatory Filings and Other Considerations That Hedge Fund Managers Should Note in the Coming Quarter

This seventeenth installment of the Hedge Fund Law Report’s quarterly compliance update, authored by ACA Group consultants Joey Martinez, Dan Campbell and Chris Ray, highlights upcoming filing deadlines and reporting requirements that fund managers should be aware of during the third quarter. This article also includes information on the SEC’s Reg Flex agendas; increased thresholds for qualified client status; recent SEC examinations focusing on environmental, social and governance factors; and regulatory interest in trading plans created pursuant to Rule 10b5‑1 under the Securities Exchange Act of 1934. For coverage of recent ACA programs, see “Navigating the SEC’s New Marketing Rule” (Jul. 8, 2021); and “Using RegTech to Enhance Compliance” (Jun. 24, 2021).

SEC Charges Private Fund CCO in Cherry Picking Scheme

The allocation of profitable trades to benefit an adviser’s principals or favored clients is a perennial subject of SEC enforcement activity. In the most recent example, the SEC has claimed that an individual who was the CCO, chief operations officer, vice president and minority owner of an investment adviser engaged in a brazen cherry picking scheme, in which he traded for himself and the adviser’s clients through an omnibus account, allegedly buying securities early in the day and allocating them only after seeing how they performed that day. He disproportionately allocated securities that appreciated in value to himself and those that fell in value to clients, and in many instances, he allegedly closed out profitable positions before allocating the trades to himself. This article analyzes the facts and circumstances underpinning the SEC’s action, the defendants’ alleged violations and the sanctions the SEC is seeking. For a look at one proposed approach to CCO liability, see our two-part series on the New York City Bar Association’s Framework: “Components and Proposals” (Jul. 15, 2021); and “CCO and Regulator Perspectives” (Jul. 22, 2021).

FINRA Issues Notice on Best Execution Duties and Payment for Order Flow

Investment advisers and broker-dealers have a fiduciary duty to seek best execution of trades for their respective clients. In the wake of the recent “meme stock” phenomenon, which was driven in part by commission-free trading and the associated payment for order flow, FINRA has issued a regulatory notice reminding member firms of the regulatory requirements concerning best execution and payment for order flow. This article discusses the key takeaways from the notice, with commentary from Carlo di Florio, chief services officer at ACA Group and former Chief Risk and Strategy Officer at FINRA, and Susan Schroeder, partner at WilmerHale and former Executive Vice President of Enforcement at FINRA. For more on meme stocks, see “GameStop and the Challenges of Monitoring Communication Channels” (May 13, 2021).

SEC Exam and Enforcement Priorities: ESG, New Marketing Rule and Other Potential Focuses (Part Two of Two)

Seward & Kissel’s Seventh Annual Private Funds Forum included a panel of speakers who explored the current SEC examination and enforcement climate as it affects private fund advisers. The discussion was moderated by Seward & Kissel partner Christopher Riccardi and featured partners Debra Franzese and Kevin Neubauer, along with counsel Daniel Bresler. This second article in a two-part series presents the speakers’ insights on the SEC’s interest in responsible investing and the new marketing rule, as well as other potential areas for SEC enforcement activity. The first article reviewed the key takeaways from the presentation on the agency’s continuing focus on cybersecurity, business continuity plans and conflicts of interest. See our two-part coverage of the SEC’s 2021 exam priorities: “New and Emerging Focus Areas” (Apr. 15, 2021); and “Perennial Focus Areas for Private Fund Managers” (Apr. 22, 2021).

Most-Read Articles