S3:E1 | Private Fund Rule Proposals--Enhancing Investor Protections or Unnecessary Sea Change? | Compliance In Context

Welcome back to the Compliance in Context Podcast!  In this episode, we discuss the recent private fund rule proposals and explore how their adoption would affect the industry.  For an in depth review of the proposals, we are joined by Jeff Blumberg—Partner at Faegre Drinker and Chair Elect of the NSCP.  Our conversation spans Form PF, rule amendments for private funds under the Advisors Act, and what Jeff deems to be problem points for private funds in the future.  In the Headlines section, we cover President Biden’s recent Executive Order on Digital Assets, as well as the recent leadership changes underway at the SEC.   Finally, we wrap up the show with another installment of Outtakes, where a recent disciplinary action can provide the perfect punch list to make sure your broker-dealer firm is meeting its requirements to obtain best execution.   

Headlines

• 1:09 – The Digital Assets Executive Order from President Biden
• 4:26 – Leadership Changes at the SEC

Interview

• 6:20 – General Remarks on Chair Gensler’s comments before the ILPA
• 12:40 – New Reporting Requirements in Form PF
• 17:40 – Sections 5 and 6 in the New Form PF
• 20:40 – Response to the Proposed Amendments in Reporting Requirements
• 22:30 – The Ongoing Importance of Documenting Process
• 25:16 – Impressions from the SEC’s January 2022 Risk Alert
• 33:41 – The New Rule Amendments for Private Funds under the Advisors Act
• 40:04 – Changes to Side Letter Provisions
• 44:15 – The Comments Period Time Crunch
• 46:18 – Looking Forward for Private Funds
• 51:20 – Jeff’s Favorite 2022 Super Bowl Commercial

Outtakes

• 53:50 – Using FINRA settlements to understand best execution standards for broker-dealer firms

Quotes:

10:30 “A lot of these rule proposals they are coming up with, these are solutions looking for a problem, because a lot of these suggestions are already being pushed by the institutional investing population.” ~ Jeff Blumberg

16:37 “If the SEC could justify the time and expense these managers are going through to put this information together and say here is what we learned by looking at last quarter’s Form PF filings, that would absolutely be something the industry would appreciate.” ~ Jeff Blumberg

23:41 “I’ve never seen the SEC come in and say you didn’t get best execution.  What I’ve seen is them say you don’t have a process for pursuing best execution.  I think you have the same kind of situation here, which is, it’s not so much they’re going to say this was material so you’re going to get in trouble; they’re  going to say we think it’s material, you didn’t, but because you took a reasonable process and put it in place, the next time the same thing comes up you should treat it as material.” ~ Jeff Blumberg

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