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Asset Management ADVocate

The Asset Management ADVocate provides unique analysis and insight into legal developments affecting asset managers in the United States.

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January 14, 2016

Fund Boards and Advisers Called to Action by SEC “Distribution in Guise” Update - Part One

Since the SEC's mutual fund distribution sweep examination began in 2013, the industry has become increasingly focused on the various types of payments made to intermediaries selling fund shares and providing services to shareholders. Fund assets may, of course, be used to compensate intermediaries for marketing and other distribution-related costs, including "shelf space" on sales platforms

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January 6, 2016

Maybe a Lender Could be a Fiduciary

In an earlier post, I criticized the case of Lash v.

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December 30, 2015

Federalism, Regulatory Assets under Management (“RAUM”), and Voluntary Registration with the SEC as an Investment Adviser -- Part Three

Parts One and Two of thi

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December 28, 2015

Welcoming “Finders” in from the Cold in California

As of January 1, 2016, a person defined as a "finder" will become exempt from the broker-dealer provisions of the California Securities Law of 1968, as amended. Under that law, the Commissioner of Business Oversight regulates the activities of broker-dealers.

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November 23, 2015

Two Regulatory Implications of the SEC’s Crowdfunding Release

On October 30th, the SEC adopted their Crowdfunding rules and the adopting release became available on October 31st, commonly referred to as Halloween. There are two interesting regulatory decisions in that 686 page release, both of which could be described with one or the other of the customary

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September 17, 2015

Can a Family Office Client Ever Cease to be a “Client;" Can a Non-Family Third Party Ever Become a “Client” of a Family Office?

The Family Office Rule states that a family office cannot have any clients other than family clients.

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September 17, 2015

It's a Miracle: Rule 2a-7 Gets Shorter

Yesterday, the SEC adopted what I hope will be the final amendments to Rule 2a-7 made during my career. For the first time in the history of Rule 2a-7, the SEC cut more than it added, reducing the length of the rule by over 12%.

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September 2, 2015

Can a Lender Be a Fiduciary to a Borrower?

I've cherished a belief that certain relationships can never be characterized as "fiduciary." The clearest example I can give is boxers. The point of a boxing match is to do things that are decidedly against the interest of your opponent. Categorically excluding boxers from being fiduciaries is best for all concerned.

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August 27, 2015

Federalism, Regulatory Assets under Management (“RAUM”), and Voluntary Registration with the SEC as an Investment Adviser -- Part Two

My initial post examined the risk of miscalculating regulatory assets under management ("RAUM") for purposes of registering with the SEC as an investment adviser.

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August 12, 2015

Revised Money Market Reform FAQs—Why Gating Would Be an Emergency

This is the second installment of my review of the update to the 2014 Money Market Fund Reform Frequently Asked Questions (the "FAQs") released on August 4th.

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August 10, 2015

Federalism, Regulatory Assets under Management (“RAUM”), and Voluntary Registration with the SEC as an Investment Adviser — Part One

As a matter of Federalism, Congress cannot require the several states to adopt laws regulating investment advisers, but it can prohibit "small" investment advisers from registering with the SEC unless they have a sufficient amount of RAUM.

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August 7, 2015

Revised Money Market Reform FAQs—Good News for Retail Funds

On August 4, the staff of the Division of Investment Management updated their 2014 Money Market Fund Reform Frequently Asked Questions (the "FAQs").

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August 3, 2015

In-Laws and Their Siblings: Part of a “Family Office”?

When the SEC adopted the Family Office Rule to implement

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July 30, 2015

Encomium for Professor Frankel

I intend to share musings on fiduciary matters from time-to-time on our blog. Not regarding deep and complex matters such as the current DOL proposal or the SEC's forthcoming uniform fiduciary standard. My fiduciary questions are more fundamental, and sometimes lead me to despair of formulating sensible views of such proposals.

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June 30, 2015

SEC Scrutinizes Evaluation of Fund Advisory Contracts

The SEC recently imposed sanctions against an investment adviser and board members of a mutual fund for their failure to evaluate thoroughly an advisory contract in violation of Section 15(c) of the Investment Company Act.

The Gartenberg factors are still the appropriate framework to use during the evaluation of advisory contracts, but approval should reflect a thorough and thoughtful pr