The Problem With Foreign Clients and Clients Residing in Foreign Jurisdictions

One of the most frequently asked questions I receive from investment advisers is whether they can enter into an advisory relationship or manage assets for a client located in a foreign country. Like the United States, foreign jurisdictions have laws that require registration for rendering investment advice to individuals residing within their jurisdiction. This post is intended to provide a bit more context for advisers trying to work through these issues.

Signs You May Want to Reconsider Your Compliance Partner

I have a lot of respect for compliance professionals, Chief Compliance Officers, legal counsel and anyone in a regulated environment that is trying to keep their client out of trouble. At the same time, I occasionally am told stories involving compliance consultants that blow me away. So I decided to compile a list of signsContinue reading “Signs You May Want to Reconsider Your Compliance Partner”

SEC Staff to Advisers: “You Must Fully Comply with the New Marketing Rule. You Can’t Partially Opt-In.”

On March 18, 2021, the staff of the Division of Investment Management released an FAQ regarding the new marketing rule. The new rule becomes effective May 4, 2022, but has a compliance date of November 4, 2022. The FAQ makes clear that an adviser may comply with the new rule prior to November 4, 2022,Continue reading “SEC Staff to Advisers: “You Must Fully Comply with the New Marketing Rule. You Can’t Partially Opt-In.””

SEC Issuing Legally Questionable Moratoriums on Registration for Foreign Investment Adviser Applicants

Investment advisers with their principal place of business in foreign jurisdictions have recently become subject to moratoriums on registration because the U.S. Securities and Exchange Commission (the “Commission” or the “SEC” ) and its Staff have concerns that these foreign applicants may be unable or unwilling to make their books and records available for inspectionContinue reading “SEC Issuing Legally Questionable Moratoriums on Registration for Foreign Investment Adviser Applicants”

Marketing Rule to Officially Become Effective on May 4, 2021

Its official. The Marketing Rule was published in the Federal Register this morning on March 5, 2021. This means that the rule will become effective on May 4, 2021. The new rule contemplates an eighteen-month transition period between the effective date of the rule and the compliance date. This means your firm should be preparedContinue reading “Marketing Rule to Officially Become Effective on May 4, 2021”

Will Investment Advisers Registered with the States Be Able to Use Testimonials?

 On December 22, 2020, the U.S. Securities and Exchange Commission adopted amendments to Rule 206(4)-1 under the Investment Advisers Act of 1940 relating to advertisements. Among other things, these amendments, when effective, will permit testimonials. The rules are currently under review by the Biden Administration and won’t become effective until 60 days after they are publishedContinue reading “Will Investment Advisers Registered with the States Be Able to Use Testimonials?”

Advisory Fees – What Does the Law Say?

There has been a lot of debate this year about the fairness of advisory fees. Who am I kidding? This is a debate that has been going on for years now. In this post, I address what the law says about advisory fees (but not performance-based fees). In my next post I plan to shareContinue reading “Advisory Fees – What Does the Law Say?”

Federal Data Breach Law is Long Overdue

I recently assisted a client with a response to a data breach incident. This isn’t an uncommon occurrence. Our law firm is notified almost weekly of a data breach incident involving one of our investment adviser clients. Most commonly, an unauthorized person gains access to an employee’s email and the inbox contains non-public information. TheContinue reading “Federal Data Breach Law is Long Overdue”

The Interconnectedness of Markets and Reserving Judgment in Light of Recent Trading Events

Acting Chair Allison Herren Lee and Commissioners Peirce, Roisman, and Crenshaw recently released a statement on the recent market volatility. Their statement highlighted the Commission’s essential mission to “protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.” Recent events serve as a reminder that these functions are interconnected and there are veryContinue reading “The Interconnectedness of Markets and Reserving Judgment in Light of Recent Trading Events”

Managing Cryptocurency and Digital Assets in Separate Accounts. Comply With The Custody Rule!

In late 2020, MicroStrategy, led by CEO Michael Saylor, purchased $650 million worth of Bitcoin as a reserve asset. Morgan Stanley and its subsidiaries and affiliates also purchased a considerable part of MicroStrategy. In early 2021, the value of Bitcoin crossed $30,000. Then $40,000. Institutional investors started flocking to the asset. Even an old stodgyContinue reading “Managing Cryptocurency and Digital Assets in Separate Accounts. Comply With The Custody Rule!”