This week we highlight two analyses, one by J.P. Morgan and the other by Ernst & Young, reviewing the 2017 proxy season. The reports address board diversity; gender equality; environmental, social and governance (ESG) issues; and the normalization of shareholder activism as high priorities and key trends for many investors and boards.
As stated in our May 25, 2017 Executive Compensation, Employee Benefits and ERISA Alert, the Department of Labor’s (DOL’s) new fiduciary rule (“Fiduciary Rule”) became partially applicable on June 9, 2017. Set forth below are a few questions that a typical private fund manager might have in response to the Fiduciary Rule, and our responses thereto.
The Fiduciary Rule, which expands the circumstances under which providers of investment advice may be considered Employee Retirement Income Security Act of 1974 (ERISA) fiduciaries, was initially published in the Federal Register on April 8, 2016, became effective on June 7, 2016, and had an original applicability date of April 10, 2017. On March 2, 2017, in response to a February 3, 2017 presidential memorandum directing the DOL to re-examine the Fiduciary Rule, the DOL published a notice proposing a 60‑day delay in the applicability date of the Fiduciary Rule. On April 7, 2017, the DOL promulgated a final rule delaying the applicability date of the Fiduciary Rule by 60 days from April 10, 2017 to June 9, 2017.
Akin Gump litigation partner Charles Connolly and associates David Coleman and Abigail Kohlman have written the article “The Role of Compliance in FCPA Enforcement,” which was published by NACD Directorship magazine, the publication of the National Association of Corporate Directors.
2015-16 Compliance Developments & Calendar for Private Fund Advisers
Registered investment advisers (RIAs) are required to review their policies and procedures on at least an annual basis. As an aid to the required review and to assist with timely completion of required compliance tasks, below is a summary of material developments during the past year and a compliance calendar for the coming 12-month period.
We encourage our investment management clients to consider their regulatory filings requirements and review their policies and procedures.
Click here to read the full report.
Just one week after the Securities and Exchange Commission (SEC) Office of Compliance Inspections and Examinations issued a new risk alert on cybersecurity, the SEC brought an enforcement action against an investment adviser under Regulation S-P for its “failure to adopt policies reasonably designed to protect customer records and information.” Although there is no evidence that any client suffered financial harm, the investment adviser settled for $75,000.
The investment adviser, RT Jones Capital Equities Management, Inc. (“RT Jones”), offered advisory services to participants in a benefit plan. In order to enroll in the services offered by RT Jones, the plan participants would go to a third-party-hosted server and enter their personally identifiable information, such as social security number, name and date of birth to verify their identity. RT Jones later discovered a breach on the third-party server. Although RT Jones had only about 8,400 customers, the data of more than 100,000 individuals who applied to be plan participants was stored on the third-party server. After a forensic investigation, it was unclear whether the personally identifiable information of the 100,000 plan participants was accessed or compromised, and RT Jones has not yet heard of any information indicating that a client has suffered any financial harm.
The Securities and Exchange Commission (SEC) proposed a new round of changes to its check-the-box registration form for investment advisers, Part 1A of Form ADV (“ADV 1A”), and proposed some minor changes to its recordkeeping rule. The proposed new ADV 1A questions would elicit new information relating to separately managed accounts. The proposed revisions also would incorporate “relying adviser” registration that was first contemplated in the SEC staff’s no-action letter to the American Bar Association in January 2012 (the “2012 ABA Letter”) directly into Form ADV for private fund advisers.