SEC Proposes New Cybersecurity Risk Management Rules for Advisers and Funds
By: Megan A. Bowman
Last week, the Securities and Exchange Commission (SEC) voted to propose new rules applicable to registered investment advisers and investment companies.
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Investment Management
Our Investment Management team is a one-stop shop offering a full range of legal services to the investment management community, so investment advisers, broker-dealers, hedge funds, private funds, financial planners, institutional investors and other industry participants may turn to one place for their legal needs.
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Email: mboos@fredlaw.com
Office: 612.492.7180
Email: ssmalleyfleming@fredlaw.com
Office: 612.492.7497
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Corporate & Securities
Corporate Governance
Data Protection & Cybersecurity
Mergers & Acquisitions
Private Equity
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“Matt Boos delivers exceptional legal advice and service in the investment management space, consistent with our firm’s values and evolving needs. Matt is knowledgeable and responsive and is an invaluable partner who instills confidence as we navigate an ever-changing business and regulatory landscape. Through his work with us on our recent SEC exam, Matt again affirmed his value as a ‘go-to’ trusted legal advisor for our firm.”
–$4B Registered Investment Advisory Firm
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Our Team
What We Do
Our team keeps abreast of the business trends and shifting regulatory factors that shape the investment management industry, so we can anticipate how those changes may impact the activities of our investment management clients.
Services
We understand that participants in the investment management industry offer a variety of services and products using a range of business models and operating platforms. We add value to investment management operations through our creative and practical legal counsel, permitting investment professionals and operations personnel to focus on managing and growing their businesses. We regularly assist compliance personnel and/or in-house legal counsel on regulatory and compliance matters. We represent investment advisers in the full range of formation, operational and regulatory matters, from advisory contracts to registration on Form ADV, as well as transactional matters such as mergers and acquisitions, internal reorganization and successions. We represent investment advisers to separate and managed accounts, advisers to pooled investment vehicles (hedge funds, private equity funds, and venture capital funds), and advisers who provide comprehensive wealth management financial services.
In addition, our attorneys are experienced in representing clients in all types of litigation and pre-litigation matters, including strategy and litigation relating to non-solicitation agreements and the broker Protocol in the context of adviser departures from existing firms. We regularly represent clients in litigation involving claims from misrepresentation, securities fraud under state and federal statutes, negligence, unsuitability, breach of fiduciary duty and churning to employment/independent contractor disputes, trade secret, non-compete/non-solicitation and raiding cases. We often represent clients on regulatory and compliance matters, including subpoenas, examinations, investigations, wells notices, and formal complaints by the SEC, FINRA, Department of Labor and State regulators. Our attorneys have served as counsel for receivers appointed by the court in the aftermath of Ponzi schemes.
At Fredrikson & Byron we believe our Investment Management team offers a compelling value proposition. We work to staff each project in a way that maintains team continuity and ensures responsive, expert service to our clients in order to provide the most cost-effective legal advice possible.
Experience
Representative Clients
Investment Advisers
We offer our investment adviser clients a range of investment management legal services tailored to each client’s business model and service offerings.
Investment management services include:
- Representing clients in Securities and Exchange Commission (SEC), Department of Labor (DOL) and state examinations and enforcement investigations and proceedings
- Analyzing registration status and registration exemptions under federal and state laws, including the Investment Advisers Act and the Investment Company Act
- Assisting with RIA registration under federal and state laws
- Advising clients with respect to corporate governance, fiduciary duty, and conflicts of interest
- Preparing and reviewing advisory contracts, customer disclosure documents, solicitation agreements and contracts with service providers
- Advising on record-keeping and reporting requirements
- Reviewing and providing advice regarding advertising and marketing materials
- Advising on custody requirements, trading obligations (e.g., best execution, trade allocation, and principal and agency cross trades), soft dollar commissions and commission recapture, and other trading and execution obligations
- Preparing codes of ethics and compliance procedures and developing compliance systems and related supervisory programs
- Assisting with employee training programs and seminars
- Facilitating ongoing compliance with the Investment Advisers Act of 1940 and similar state laws
- Assisting clients’ implementation and adherence to industry best practice standards
- Formation of private funds and preparation of offering memorandums, fund agreements and subscription agreements
- Form D and related state compliance and filings for private offerings
- Analyzing registration exemptions as CPO (commodity pool operator) under the CFTC
- Structuring and negotiating strategic transactions involving investment advisers, broker-dealers and their representatives, including mergers and acquisitions, joint ventures and other contractual relationships, succession and transition planning, and guidance regarding relevant regulatory considerations
Broker/Dealers
Fredrikson & Byron advises brokers with regard to a broad range of regulatory and compliance issues, including:
- Analyzing exclusions and exemptions from registration
- Representing clients with respect to private placement, merger & acquisition, and other transactional matters
- Facilitating SEC, Financial Industry Regulatory Authority (“FINRA”) and state registrations
- Providing advice with respect to FINRA rules and regulations and ongoing compliance with regulatory requirements
- Preparing written supervisory policies and procedures
- Providing guidance on books and records requirements and record retention obligations
- Representing clients in SEC and FINRA examinations and enforcement investigations and proceedings
- Preparing and negotiating selling agreements, including dealer-management agreements and soliciting dealer agreements
- Structuring and negotiating strategic transactions involving investment advisers, broker-dealers and their representatives, including mergers and acquisitions, joint ventures and other contractual relationships, succession and transition planning, and guidance regarding relevant regulatory considerations
Litigation & Arbitration
Fredrikson & Byron represents investment advisors, broker-dealers, financial planners and investment companies in state and federal courts, arbitration matters, and regulatory proceedings around the country. Our expertise includes:
- Regulatory Enforcement Proceedings (SEC, FINRA, DOL, etc.)
- Broker-Dealer Litigation/Arbitration
- Securities/Financial Industry Employment Litigation, including trade secret, non- compete/non-solicitation and raiding cases
- Breakaway broker cases involving strategy and/or litigation around the broker Protocol
- Closely-Held Companies – representing minority and majority owner groups
- Director and Officer Liability
- Multi-Party and Class Actions
- Publicly Traded Companies
- Securities Fraud Lawsuits
- Shareholder/Corporate Control Disputes
- Securities Fraud/Broker-Dealer Litigation
Institutional Investors
We have experience representing investors – including family offices, pension funds, endowments, and high-net-worth individuals – in various matters, including:
- Negotiating, analyzing and structuring alternative investments, including REITs
- Conducting due diligence evaluations of REIT and other alternative investment platforms
- Negotiating secondary sales of alternative investments
- Review of fund offering documents, including advice on market terms
- Assistance completing subscription agreements for investments in private equity and hedge funds
- Retention of third party advisers, including preparation, review and negotiation of investment advisory agreements and sub-advisory agreements
We understand the increasing demands placed on many investors to properly evaluate various investment structures and terms, to receive transparent and timely reporting, to analyze and evaluate conflicts of interest that are inherent in most fund platforms, and to understand liquidity provisions. We provide counsel to help investors mitigate or otherwise manage structural risks and to preserve investor rights when unexpected events occur.
News & Articles
SEC Releases Its 2021 Exam Priorities
March 15, 2021
By Ryan C. Young and Matthew T. Boos
The SEC, through its Division of Examinations, has published its exam priorities for 2021. According to the SEC, these priorities reflect certain practices and products that may present more risk to investors and/or the integrity of the U.S. capital markets. This article contains several items of interest to Registered Investment Advisers and Broker-Dealers.
Must an RIA Disclose Its Receipt of a PPP Loan? Consider the Facts and Circumstances
May 6, 2020
Are RIA firms required to disclose to clients a successful PPP loan application? One can imagine circumstances requiring disclosure, but what if the circumstances were different?
SEC Removes Conditions On ADV Amendment Filing Extension
March 31, 2020
The SEC issued an updated order regarding a temporary exemption from certain requirements of the Investment Advisers Act of 1940.
SEC Announces Conditional ADV Amendment Filing Extension
March 17, 2020
On Friday, in response to the outbreak of COVID-19, the SEC issued an Order providing a temporary exemption from certain requirements of the Investment Advisers Act of 1940.
Regulation Best Interest Update Webinar
March 10, 2020
On March 12, 2020, our Investment Management and Securities Litigation attorneys provided an update on and analysis of Regulation Best Interest (Reg BI).
The SEC’s 2020 Exam Priorities
January 17, 2020
According to the SEC, these priorities reflect certain practices and products that may present heightened risk to investors and/or the integrity of the U.S. capital markets.
Senior Investor Update: Minnesota Enacts Safe Seniors Financial Protection Act
November 1, 2018
By Ryan C. Young & Matthew T. Boos
Over the last few years, the securities industry has seen increased efforts from the FINRA, the SEC and other state and federal regulatory authorities, to generally increase protections afforded to senior investors and prevent financial exploitation of seniors.
California Passes Groundbreaking New Privacy Law
July 3, 2018
On June 28, California enacted a sweeping new privacy law that will have significant implications for companies across the country.
Don’t be Caught Off Guard: Strategies to Manage Risk for Investment Advisors
May 30, 2018
Join co-sponsors Fredrikson & Byron, Charles Schwab and BMO Global Asset Management on June 26 as leading regulatory, industry experts and attorneys provide Investment Advisors with strategies for their businesses and clients.
FINRA Announces 2018 Regulatory and Examination Priorities
January 22, 2018
By Ryan C. Young and Matthew T. Boos
The Financial Industry Regulatory Authority (FINRA) published its 2018 Annual Regulatory and Examination Priorities Letter on January 8, 2018.
SEC’s Use of Disgorgement Remedy Limited by Five-Year Limitations Period
July 27, 2017
By Ryan C. Young & Matthew T. Boos
On June 5, 2017, the Supreme Court placed a significant limitation on the SEC’s use of disgorgement in enforcement actions.
Emerging Trend: States Adopting Cybersecurity Regulations for Financial Services Industry
July 17, 2017
New cybersecurity regulations impacting broker-dealers and investment advisers in Colorado went into effect over the weekend.
FINRA Enacts New Rules Addressing Financial Exploitation of Seniors, as Regulators Increase Vigilance Protecting Senior Investors Generally
June 15, 2017
By Ryan C. Young & Matthew T. Boos
The Financial Industry Regulatory Authority announced a February 5, 2018, effective date for FINRA’s new rules aimed at addressing financial exploitation of seniors.
New York’s New Cybersecurity Regulation: What’s the Impact?
May 10, 2017
With cyber intrusions becoming more common and sophisticated, the New York State Department of Financial Services has implemented a new regulation to combat these ever-increasing dangers.
Top Trends in Data Protection and Cybersecurity in 2017: Ransomware Will Happen
February 3, 2017
By Ann M. Ladd
Like it or not, ransomware is happening, and will continue to happen with increasing frequency. In fact, a recent survey indicates that 93 percent of phishing emails contain ransomware.
Financial Services Industry Targeted in Wave of Lawsuit Threats Over Websites Allegedly Inaccessible to the Visually Impaired
November 15, 2016
By Matthew T. Boos, Steven E. Helland & Karla L. Reyerson
In a trend that began several years ago and has migrated through several industries, investment firms are among those being targeted by enterprising plaintiffs’ lawyers alleging that the firms’ website are inaccessible to blind or otherwise disabled users. The claim is that the firms are violating the Americans with Disabilities Act (ADA).
Morgan Stanley’s $1M Settlement with SEC Highlights Importance of Regular Testing of Policies and Procedures to Safeguard Customer Information
June 30, 2016
By Sandra Smalley-Fleming & David D. Coyle
The SEC recently issued a press release announcing “that Morgan Stanley Smith Barney LLC has agreed to pay a $1 million penalty to settle charges related to its failures to protect customer information, some of which was hacked and offered for sale online.”
DOL Issues Final Conflict of Interest Rule
April 7, 2016
By Debra J. Linder & Matthew T. Boos
On April 6, 2016, the Department of Labor issued its much-anticipated conflicts of interest final rule. Like the proposed rule, the final rule broadens the definition of fiduciary and will likely require more investment advisers to comply with the fiduciary rules under the Employee Retirement Income Security Act of 1974 (ERISA), as it applies to advice provided to both qualified retirement plan participants and IRA account holders.
Retirement Advisers Get Ready – You May Have a Heightened Duty to Clients
April 21, 2015
A recent statement by President Barack Obama warned of future changes to the fiduciary duties for financial advisers. While requesting the Department of Labor to update its fiduciary rules, President Obama stated, “It’s a very simple principle: You want to give financial advice, you’ve got to put your client’s interests first.”
