August 9, 2017

Revisiting the SEC’s 2015 “Summary of Cybersecurity Examination Sweep”

The SEC has recently completed its Cybersecurity Examination Initiative, aimed at better understanding how broker-dealers and advisers address the legal, regulatory, and compliance issues associated with cybersecurity. The examined firms were selected to provide perspectives from a cross-section of the financial services industry and to assess various firms’ vulnerability to cyber-attacks. The review was designed to discern basic distinctions among the level of preparedness of the examined firms. As a result of this review, OCIE highlights several factors that firms may consider to: (1) assess their supervisory, compliance and/or other risk management systems related to cybersecurity risks, and (2) make any changes, as may be appropriate, to address or strengthen such systems.

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August 9, 2017

SEC shares “Observations from Cybersecurity Examinations”

As cybersecurity remains one of the top compliance risks for financial firms, the SEC has released a Risk Alert on observations from OCIE’s Cybersecurity 2 Initiative. Following the initial initiative in 2014 that undertook to assess associated industry practices and legal and compliance issues, the more recent focus was on more validation and testing of procedures and controls surrounding cybersecurity preparedness.

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August 3, 2017

Director of the Division of Investment Management to leave the SEC

The SEC announced today that David W. Grim, Director of the Division of Investment Management, will leave the agency next month after more than 20 years of public service. The SEC announced today that David W. Grim, Director of the Division of Investment Management, will leave the agency next month after more than 20 years of public service.

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June 22, 2017

Seward & Kissel Participates in Washington, DC Compliance Roundtable

Click here for notes from June 15, 2017 members meeting with Mark J. Dowdell, Assistant Regional Director of Securities and Exchange Commission (Philadelphia Regional Office).

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June 22, 2017

Q&As — Now That the DOL’s Fiduciary Rule Is Applicable

Q 1:    What representations should a private investment fund get from new "benefit plan investors"? A:    Assuming that an investment manager or "you" are not intending to rely on the "best interest contract" ("BIC") prohibited transaction exemption and except as discussed in Q 2 below, a private investment fund can only be offered to an ERISA plan or IRA which employs an "independent fiduciary with financial expertise" ("IFFE") in connection with the investment into the fund. Under the Department of Labor fiduciary rule (the "Rule"), you can rely on representations from investors as to their qualifications as an IFFE. We recommend that any new investment from a "benefit plan investor" only be accepted if the investor can and does make representations and warranties as to IFFE involvement (Exhibit A provides a sample representation form). While the Rule also requires that an IFFE meet several other requirements, we do not believe that during the "transition period" (i.e., through December 31, 2017), additional representations are required in order for a private investment fund to rely on the IFFE exception to the Rule. The representations from "benefit plan investors" in Seward & Kissel's typical subscription agreements contain several provisions that address these other requirements, which, we believe, when used in conjunction with the additional representations set forth on Exhibit A, should suffice during the "transition period".

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May 26, 2017

The DOL Fiduciary Rule – Action Steps for Investment Managers

The new Department of Labor fiduciary rule (the "Fiduciary Rule") will be applicable on June 9, 2017. If you have not already done so, you need to address these rule changes as they relate to ERISA plans and individual retirement accounts (IRAs) regarding: Post June 9th subscriptions for private fund investments; Separately Managed Accounts that use brokers/dealers affiliated with the investment manager, or invest in mutual funds affiliated with the investment manager; and Holistic advice that advises on ERISA plan rollovers to an IRA.

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April 14, 2017

The Department of Labor Delays the New Fiduciary Rule

On Friday April 7th, the Department of Labor published in the Federal Register amendments to its fiduciary regulation (the "New Fiduciary Rule") and related prohibited transaction exemptions (the "Exemptions"). The amendments delay until June 9, 2017 the "Applicability Date" of the New Fiduciary Rule and the Exemptions.

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April 12, 2017

SEC Issues Guidance Update on Robo-Advisers

The staff (the "Staff") of the SEC's Division of Investment Management recently issued a Guidance Update regarding automated advisers, which are often colloquially referred to as "robo-advisers."1 Robo-advisers typically are registered investment advisers that use innovative technologies to provide discretionary asset management services to their clients through online algorithmic-based programs. The Staff has been monitoring and engaging with robo-advisers in order to determine how robo-advisers meet their obligations under the Investment Advisers Act of 1940 (the "Advisers Act").

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March 31, 2017

Investment Adviser Sanctioned for Failure to Disclose Conflicted Revenue Arrangements

The SEC recently settled charges against an investment adviser (the "Adviser") for failing to disclose to its clients compensation it received through arrangements with a third-party broker-dealer (the "Broker") and the resulting conflicts of interest.

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March 28, 2017

Client Alert: SEC Adopts T+2 Settlement Cycle for Securities Transactions

On March 22, 2017, the Securities and Exchange Commission (“SEC”) adopted an amendment to Rule 15c6-1(a) under the Securities Exchange Act of 1934 (“Exchange Act”), shortening the standard settlement cycle (i.e., the length of time between trade execution and delivery of cash and securities to the seller and buyer) for most securities transactions effected through broker-dealers from three business days (“T+3”) to two business days (“T+2”). The change means that when an investor buys a security, the brokerage firm must receive payment from the investor no later than two business days after the trade is executed; and, when an investor sells a security, the investor must deliver the security no later than two business days after the sale.

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