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    Nov. 18, 2021

Exams of Non‑U.S. Advisers: U.S. Versus Non‑U.S. Exams and SEC Versus Foreign Regulator Exams (Part Two of Three)

According to the SEC’s Division of Examinations (Examinations) 2021 Examination Priorities, there are now more than 900 offshore registered investment advisers, managing nearly $12 trillion in investor assets. Given that many of those non‑U.S. advisers manage private funds, such as hedge and private equity funds, and Examinations’ continuing focus on advisers to private funds, it is unsurprising that the SEC appears to have stepped up its efforts to conduct examinations of non‑U.S. advisers to private funds. This second article in a three-part series compares SEC exams of U.S. advisers to exams of non‑U.S. advisers and exams conducted by the SEC to those conducted by foreign regulators. The third article will provide practical tips for non‑U.S. advisers that may face an SEC exam for the first time. The first article discussed the SEC’s authority to conduct examinations of non‑U.S. advisers and the recent trend of more exams of those advisers. See our two-part series on the 2021 Examination Priorities: “New and Emerging Focus Areas” (Apr. 15, 2021); and “Perennial Focus Areas for Private Fund Managers” (Apr. 22, 2021).

Fireside Chat With SEC Chair Gensler: Three Key Disclosure Areas (Part One of Two)

At a recent “fireside chat” presented by the NYU School of Law Program on Corporate Compliance and Enforcement and the Institute for Corporate Governance and Finance, current NYU law professor and former SEC Commissioner Robert J. Jackson, Jr. spoke to SEC Chair Gary Gensler about a wide range of matters on the Commission’s agenda. This first article in a two-part series covers their discussion of disclosure rules on climate change risk, human capital, cybersecurity and political contributions. The second article will review their conversation about beneficial ownership reporting; shareholder voting and proxy firms; individual accountability; payment for order flow; Regulation Best Interest; short selling; and other market structure issues. See “SEC Compliance and Enforcement Expectations for Private Funds Under Chair Gensler” (Oct. 7, 2021); and “SEC Regional Heads Discuss SEC Structure and Priorities” (Sep. 23, 2021).

ALFI Seminar Examines E.U. Funds Landscape and Regulatory Developments Affecting Distribution (Part One of Two)

At the recent Digipulse USA seminar presented by the Association of the Luxembourg Fund Industry (ALFI), funds industry professionals examined recent significant trends and regulatory developments in the funds industry and their impact on U.S. managers. Marc‑André Bechet, deputy director general of ALFI, hosted the presentation. This article, the first in a two-part series, highlights the portions of the seminar that addressed the growth of the European funds industry, as well as fund distribution in the E.U., including the relative costs and benefits of authorized funds versus private placements and passported funds’ need for authorized distributors. The second article will address the new pre‑marketing regime under the cross-border distribution of funds directive; distribution in Switzerland and post-Brexit U.K.; and retail alternative investment products. A future article will outline the parts of the seminar devoted to sustainable investing and anti-money laundering compliance. For additional insights from ALFI, see “ALFI/KPMG Survey Details Evolution and Growth of Luxembourg Private Debt Funds” (Feb. 11, 2021).

SBAI Issues Culture and Diversity Strategies Framework

The Standards Board for Alternative Investments (SBAI) recently issued a new report that sets forth and expounds on five non-prescriptive principles pertaining to leadership, strategy, communications, policies and inclusion. They are intended to serve as a framework that asset managers can use to define their culture and diversity strategies. This article examines the report, with commentary from Jane Buchan, Global Chair of the SBAI Culture and Diversity Global Advisory Committee and CEO of Martlet Asset Management, LLC; and Marc Tannous, managing director at Silver Leaf Partners. See our two-part series on diversity and inclusion in asset management: “Key Challenges and Impacts of 2020 Events” (May 13, 2021); and “Structural Barriers and Investor Impact” (May 20, 2021).

Various Areas of Regulatory Divergence Between the U.K. and E.U. Caused by Brexit (Part Two of Two)

Forming the E.U. was a massive undertaking that touched on many areas of society, and attempts to unravel the U.K.’s role in that union are proving no less complex. Brexit is forcing the E.U. and U.K. to decide where they respectively stand on issues such as environmental, social and governance investing; capital markets; cross-border marketing; and public markets trading. Unfortunately, there is no single obvious path forward, as some U.K. fund managers want the bodies to adopt substantially equivalent regulations, while others view it as an opportunity for the U.K. to develop more advantageous or efficient approaches. Those were addressed in a panel at a virtual conference sponsored by ACA Group featuring Darren Fox, partner at Simmons & Simmons; Adam Jacobs‑Dean, managing director of the Alternative Investment Management Association; and Robin Meister, the former global head of U.S. regulatory affairs at BNP Paribas Asset Management. This second article in a two-part series details the potential divergence of U.K. and E.U. regulatory regimes in the aforementioned areas. The first article outlined the current state of play in U.K./E.U. relations and financial services arrangements; the immediate impact of Brexit on cross-border marketing; and upcoming U.K. policy developments. See “Panel Examines the E.U. Alternative Investing Landscape” (Oct. 22, 2020).

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