Hedge Fund Quarterly Update Q3 2022

We are pleased to provide this latest update to keep you apprised of regulatory developments in the private fund and liquid alternatives space.

With the November 4, 2022 compliance deadline for the U.S. Securities and Exchange Commission’s (SEC’s) Marketing Rule approaching, many hedge fund managers have been evaluating their marketing materials and performance calculation processes to ensure consistency with the requirements set forth within the Adopting Release, which is particularly challenging given that the SEC staff has declined to release any FAQs or other interpretive guidance surrounding the rule. In this issue, we’ll discuss some options for net performance calculations.

The SEC has also continued its rulemaking, with a second set of proposed Form PF changes issued jointly with the Commodities Futures Trading Commission (CFTC) in August that would have a material impact on hedge fund managers, and adopted amendments to electronic filing requirements of investment advisers, each of which are discussed herein.

This update also includes a summary of selected SEC enforcement actions associated with hedge fund managers, including a discussion on the SEC’s focus on unapproved electronic communications. This update also provides information on an alert issued by the SEC outlining certain examination deficiencies observed regarding material non-public information and code of ethics controls and procedures, as well as recent changes in the cybersecurity regulatory landscape.

This update will cover

• New Marketing Rule Performance Net Return Calculation Methodologies
• Proposed Form PF Changes
• Potential AML Regulations for Investment Advisers?..
• Recent Enforcement Action Highlights Risks of Business Communications Through Unapproved Mobile Apps
• SEC Adopts Rules to Require Electronic Filing
• Compliance and Risk Management: One Team
• SEC Issues Risk Alert on Insider Trading and Code of Ethics Deficiencies
• SEC Charges Investment Adviser and its Former Co-CEOs with Misleading Investors and Clients
• Firm Charged with Rule 105 of Regulation M Violations
• Emerging Threats in the Cyber Landscape
• 2022 Investment Management Compliance Testing Survey Released
• Task Force on Climate-Related Financial Disclosures Quick Reference Guide
• ACA Group Acquires Data Specialist Ethos ESG to Offer First Data Analytics Product

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How we help

Compliance teams need continuous support and knowledge sharing to stay on top of regulatory initiatives. Our team helps you navigate the evolving regulatory landscape while considering the complexity of your firm’s unique compliance requirements.

We help our clients manage regulatory compliance, cybersecurity and risk, and performance verification through our consulting, outsourcing, and technology solutions. Our services and solutions include standard and customized compliance packages, cybersecurity and technology risk assessments, Global Investment Performance Standards (GIPS^®) compliance and other performance services, and a variety of business advisory, technology, and training solutions for financial services firms.

Contact us if you have any further questions about these rule proposals, or how ACA can help your firm meet your regulatory requirements.