Oct. 21, 2021

Post‑Pandemic Workplace Vaccines and Testing Policy Checklist

As fund managers plan to welcome employees back to the physical workplace, uncertainty surrounds what they can ask employees, how the information should be handled internally, how to manage access to that information and whether the information can be disclosed externally. This checklist, derived from the Hedge Fund Law Report’s in-depth article series, is designed to help fund managers take an approach that balances equal employment, safety and privacy concerns and obligations. See our two-part series “Vaccines and Testing in the Post-Pandemic Workplace”: Understanding the Legal Framework and Making a Balanced Plan (Jul. 29, 2021); and Answers to the Tough Questions (Aug. 5, 2021).

Compliance Corner Q4‑2021: Regulatory Filings and Other Considerations That Hedge Fund Managers Should Note in the Coming Quarter

This eighteenth installment of the Hedge Fund Law Report’s quarterly compliance update, authored by ACA Group (ACA) consultants Joey Martinez and Dan Campbell, highlights upcoming filing deadlines and reporting requirements that fund managers should be aware of during the fourth quarter. This article also discusses the testimony of SEC Chair Gary Gensler before the U.S. Senate Committee on Banking, Housing and Urban Affairs; the SEC’s scrutiny of the use of “alternative data”; a recent SEC case charging a former employee of a biopharmaceutical company with “shadow trading”; and a risk alert issued by the SEC’s Division of Examinations concerning fixed income principal and cross trading practices. For coverage of a recent ACA program, see “Recent Regulatory and Market Developments Affecting Digital Asset Funds and Digital Securities” (Jul. 22, 2021).

Two Sides of the Same Coin: SEC Commissioners Peirce and Roisman Argue Against Prescriptive ESG Disclosures (Part One of Two)

Environment, social and governance (ESG) issues have become more prominent, creating increased pressure on governments, corporations and individuals to respond. ESG is a divisive topic within the private funds industry, however, and there is no consensus on its scope or how ESG factors should be measured. The SEC’s potential role in overseeing fund managers’ ESG practices is also a live issue that is sparking debate within the Commission itself. Recent remarks from SEC Chair Gary Gensler, as well as Commissioners Allison Herren Lee, Hester M. Peirce and Elad L. Roisman, reflect their personal views rather than the SEC as a whole but nevertheless spotlight sharp divisions in the agency as to whether the SEC can – or should – implement an ESG disclosure framework. Although the Chair and each Commissioner prioritized investors and emphasized the SEC’s mandate, they disagreed about the extent to which ESG reporting would serve or further the SEC’s mission. This first article in a two-part series details the arguments raised by Peirce and Roisman, including ten theses for why SEC-mandated ESG disclosure requirements are inappropriate. The second article will summarize Gensler’s and Lee’s counterarguments for an increased role for ESG in corporate governance efforts, including mandatory climate risk disclosure rules and directors’ duties to consider ESG factors. For additional coverage of SEC speeches, see “SEC Officials Clarify the Commission’s Stance on ESG Investing and the Role of Disclosure” (Oct. 15, 2020); and “Understanding the Wells Process: SEC Enforcement Staff Views of the Process (Part Two of Three)” (Jun. 20, 2019).

Parallel Actions Against Securities Analyst Show SEC and DOJ Focus on Front‑Running

Monitoring employees’ compliance with personal trading policies is one of an adviser’s essential – but very challenging – compliance duties. Employees intent on ignoring policies and filing false compliance attestations may be hard for an adviser to detect. On the other hand, the recent SEC enforcement action and parallel criminal complaint against a securities analyst show that the SEC investigators, and their counterparts at the DOJ, have powerful tools for detecting market abuse by advisers’ employees and others. The SEC has claimed that the analyst made millions of dollars in illicit profits through a years-long front-running scheme, trading ahead of his large investment adviser employer in an undisclosed account in his wife’s name. This article outlines the allegations in the civil and criminal complaints, with commentary on the implications of the actions from Akin Gump partners Peter I. Altman, Michael A. Asaro and Brian Daly. For more on personal trading, see our three-part series on code of ethics fundamentals: “Why Fund Managers Need Them” (May 20, 2021); “What They Must – and May – Include” (Jun. 3, 2021); and “How to Monitor and Enforce Compliance With Them” (Jun. 10, 2021).

ACA Compliance Testing Survey: New Marketing Rule Is a Hot Topic (Part Two of Two)

ACA Group (ACA), together with the Investment Adviser Association and Yuter Compliance Consulting, recently released the results of its 2021 investment management compliance testing survey. This article, the second in a two-part series, covers the survey’s findings as to hot topics, the new marketing rule, disclosure to regulators, trading matters and regulatory priorities, with insights from Enrique Alvarez, director at ACA. The first article reviewed the main findings of the study as to compliance programs and testing; advisers’ responses to the coronavirus pandemic; responsible investing; and climate change risk. For coverage of another ACA survey, see our two-part series on its 2019 hedge fund survey: “SEC Exam Experience, Codes of Ethics, Electronic Communications and Expense Allocations” (Aug. 8, 2019); and “Insider Trading Controls, Cybersecurity, Valuation, Marketing and Custody” (Aug. 15, 2019).