July 8, 2020
On July 2, 2020, the SEC entered into a settlement order with an adviser and its foreign affiliate (Order) involving violations of the fund-of-funds ownership restrictions in Section 12(d)(1)(A) of the 1940 Act and the compliance rules contained in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Advisers Act.
Certain registered funds managed by the adviser and certain foreign funds managed by the foreign affiliate exceeded the 1940 Act’s fund-of-funds restrictions as a result of investments in ETFs, and some of the registered funds incurred losses from selling shares of an ETF to correct the violation.
These losses initially were not reimbursed by the adviser and were not disclosed to the registered fund’s board. The Order also alleged that the adviser violated its trade error policy and made misleading disclosures to the registered funds’ board in violation of the Investment Advisers Act of 1940.
The Order is available here: https://www.sec.gov/litigation/admin/2020/ia-5531.pdf
This Seward & Kissel memorandum describes the Order in greater detail: https://www.sewkis.com/publications/registered-fund-adviser-and-affiliate-censured-and-fined-for-violations-of-section-12d1a-fund-of-funds-limitations-and-compliance-rules/
November 27, 2024
November 19, 2024
November 12, 2024
November 11, 2024
November 5, 2024
November 4, 2024
November 1, 2024
October 31, 2024
October 24, 2024
October 9, 2024
October 8, 2024
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
One Battery Park Plaza
New York, NY 10004
Phone (212) 574-1200
Fax (212) 480-8421
901 K Street, NW
Washington, DC 20001
Phone (202) 737-8833
Fax (212) 480-8421
Contact Us
General/Media Inquiries – info@sewkis.com
Legal Recruiting – recruiting@sewkis.com
Staff Recruiting – hr@sewkis.com
© 2024