Investment
Management
Update
Lawyers to the investment
management industry
The Implementation of UCITS IV Directive in Italy
Towards Recovery of the Competitive Gap
By Pasquale Marini and Giulio Sandrelli
Fall 2012
Italy boasts a solid level of private savings. Despite this potential, the
growth of a competitive mutual fund industry has been negatively affected,
In this issue:
historically, by “gold-plate” legal constraints, lack of regulation in cross-
The Implementation of UCITS IV
As a result, domestic players have often preferred to establish their
Directive in Italy: Towards Recovery of
management companies and mutual funds abroad (typically in Luxembourg
the Competitive Gap........................ 1
and Ireland) and reach their Italian clients through cross-border offerings.
border transactions, and—most importantly—an uncompetitive tax policy.
FinCEN Explores Adding New Explicit
Continued on page 10
Customer Due Diligence Requirements
to Current AML Requirements.......... 1
Trading and Markets Corner:
Limit Up - Limit Down and Narrower
Market-Wide Circuit Breakers: What
Do These Pilot Programs Mean for
FinCEN Explores Adding New Explicit Customer
Due Diligence Requirements to Current AML
Requirements
By András P. Teleki and Collins R. Clark
Market Participants? ...................... 2
In an advance notice of proposed rulemaking published on March 5, 2012
The SEC’s Aggressive New Approach
(the “Proposal”), the Financial Crimes Enforcement Network (“FinCEN”)
to Advisers..................................... 4
announced its intention to develop a regulation to codify, clarify, consolidate
Use of Social Media by Fund Firms... 6
institutions under the Bank Secrecy Act (the “BSA”) and to establish a
The Search for Systemic Risk Turns to
Money Market Mutual Funds............ 8
and strengthen customer due diligence (“CDD”) obligations of financial
categorical requirement for financial institutions to identify beneficial
ownership of their account holders. The contemplated new rule would
expand existing AML obligations by codifying CDD requirements that FinCEN
asserts are implicit in the current AML regime but are inconsistently applied.
The Proposal would also greatly expand current CDD obligations by requiring
financial institutions to obtain information regarding their customers’
beneficial owners, an expansion that, at best, will be challenging to financial
institutions in general, and could be particularly onerous to mutual funds.
The CDD Proposal is part of a broader international effort to combat money
laundering, terrorist financing and tax evasion.
Continued on page 12
Fall 2012
1
Trading and Markets Corner
Limit Up - Limit Down and Narrower Market-Wide Circuit Breakers: What Do These Pilot
Programs Mean for Market Participants?
By K. Susan Grafton
On May 31, 2012, the Securities and Exchange Commission (“SEC”) approved
duration of the Limit State based on market
two self-regulatory organization (“SRO”) rule proposals designed to address
participants’ trading experience during the
market volatility of the type experienced during the May 6, 2010 flash crash.
The proposals, the “Limit Up - Limit Down Plan” (or the “Plan”) and the
All trading centers (i.e., exchange and
“Revised Market-Wide Circuit Breakers” (the “Revised Circuit Breakers”), will
other self-regulatory organization trading
initially be implemented as one-year pilot programs currently scheduled to
facilities, as well as alternative trading
commence on February 4, 2013.
1. The Limit Up - Limit Down Plan
The Plan is designed to address
extraordinary volatility in the equity markets
and replaces the existing single stock circuit
breaker pilot that was established following
the flash crash. The Limit Up - Limit Down
Plan was designed to prevent transactions
in “NMS stocks” (i.e., exchange-traded
securities other than options, rights, and
warrants) from occurring outside of a rolling
price band that will be defined for each
security by percentage levels below (the
“lower price band”) and above (the “upper
price band”) a specified reference price for
the particular security.
If the national best offer equals the lower
price band and does not cross the national
best bid, or the national best bid equals
the upper price band and does not cross
the national best offer, the security will
be in a “Limit State.” The securities
industry processors for exchange-listed
The Plan will be implemented in two
phases: Phase I, which is scheduled to
begin February 4, 2013, will apply only to
Tier 1 NMS stocks, which consist of stocks
that are components of the S&P 500®
Index, the Russell 1000 Index and certain
exchange-traded products (“ETPs”) listed
in the Plan. (The list of ETPs included in
Tier I will be updated on a semi-annual
they execute orders internally as principal
or by crossing orders as agent) will be
required to establish, maintain, and enforce
written policies and procedures reasonably
designed to prevent the display of offers
and execution of trades in NMS stocks that
fall outside the relevant price band for the
security at the time the quote is entered
and displayed.
basis.) The price bands will not apply from
Single-priced opening, reopening, and
9:30 a.m. Eastern time to 9:45 a.m. Eastern
closing transactions on the primary
time (the “Opening Period”) or from 3:35
exchange for the NMS stock may occur
p.m. Eastern time to 4:00 p.m. Eastern time
outside of the price bands. In addition,
(the “Closing Period”). Phase II, which will
transactions that are excepted or exempt
begin six months after Phase I commences,
under Rule 611 of Regulation NMS and
will extend the pilot to all NMS stocks and
that do not update the last sale price
will apply during the Opening and Closing
(except if solely due to late trade reporting)
Periods, during which times the price
are excluded from the trading restriction,
bands will be doubled.
and they may be executed outside of the
Table 1 provides a summary overview of
the key elements of the Limit Up - Limit
Down Plan.
securities will be responsible for calculating
An NMS stock will exit the Limit State if the
and disseminating updated price band
entire size of all Limit State quotations are
information and identifying quotations that
executed or cancelled. If neither occurs
are in a Limit State.
within 15 seconds, the primary listing
pause. It is possible that the SROs will
seek to shorten or lengthen the 15 second
Investment Management Update
systems, market makers, and other brokerdealers that are trading centers because
exchange will declare a five minute trading
2
pilot program.
price bands.
2. Revised Market-Wide
Circuit Breakers
Table 2 provides a comparison of the old
Currently, the rules of the Financial
The Revised Circuit Breakers are intended
next few months to review not only their
Industry Regulatory Authority (“FINRA”)
to address the realities of high-speed
compliance policies and supervisory
and the fifteen U.S. equity exchanges,
markets. According to the SEC, the
procedures regarding the Limit Up -
including the New York Stock Exchange
existing market-wide circuit breakers,
Limit Down Plan and the Revised Circuit
LLC and the NASDAQ Stock Market LLC,
which were adopted in 1988, have been
Breakers, but also how these new
provide for market-wide circuit breakers
triggered only once — in 1997. The new
measures will affect their trading and
that halt trading in all NMS securities
7% Level 1 Halt, however, would have
hedging strategies. Among other matters,
in the event of extraordinary market
been triggered 13 times since 1962. The
market participants might want to consider:
volatility. The SEC staff has noted that
Revised Circuit Breakers will operate as a
NMS securities are exchange-listed equity
one-year pilot beginning February 4, 2013.
and revised market-wide circuit breakers.
securities and standardized options,
3. Compliance Considerations
Market participants will want to use the
• How will orders and trades near
the Limit State be monitored and
what type of early warning system is
but do not include exchange-listed debt
needed?
securities, securities futures, or open-
• What type of post-execution
end mutual funds because they are
information will be available to
not currently reported to an effective
transaction reporting plan within the
determine if a Limit State existed, and
meaning of Rule 600 of Regulation NMS.
for how long will that information be
made available?
Continued on page 15
Table 1: Key elements of the Limit Up - Limit Down Plan
Time Period
Covered Securities
NMS stocks with a reference price above
$3.00
Regular trading hours, except
9:30 a.m. - 9:45 a.m. ET and
3:35 p.m. - 4:00 p.m. ET
During market Open (9:30
a.m. - 9:45 a.m. ET) and Close
(3:35 p.m. - 4:00 p.m. ET)
Commences in Phase II
Applicable Price Band
Tier 1: 5%
Tier 2: 10%
NMS stocks with a reference price equal to
$0.75 up to and including $3.00
All NMS stocks: 20%
NMS stocks with a reference price below
$0.75
All NMS stocks: Lesser of $0.15 or
75%
NMS stocks with a reference price above
$3.00
Tier 1: 10%
Tier 2: 20%
NMS stocks with a reference price equal to
$0.75 up to and including $3.00
All NMS stocks: 40%
NMS stocks with a reference price below
$0.75
All NMS stocks: Lesser of $0.30 or
150% (upper band only)
Fall 2012
3
The SEC’s Aggressive New Approach
to Advisers
By Luke T. Cadigan
The SEC has sharpened its focus on investment advisers and investment
data analytics to identify the firms and
companies and is bringing record numbers of enforcement actions against
practices that present the greatest risks to
those registrants. From 2009 to 2011, the number of enforcement actions
investors, markets and capital formation.
brought against investment advisers and investment companies rose more
As OCIE Director Carlo di Florio previously
than 92 percent, from 76 in FY 2009 to a record 146 in FY 2011. By
noted, this new risk-based approach
comparison, during the same period, the number of overall enforcement
is driven in part by the fact that OCIE’s
actions increased only 14 percent from 644 to 735. This focus on
investment management is likely to continue with additional SEC scrutiny on
newly registered hedge funds and private equity advisers.
current examination resources only
can cover an ever smaller portion of
the registrants that it is responsible
for examining. As a result, OCIE has
abandoned routine or cycle examinations.
The Division of Enforcement’s
Asset Management Unit
inception, the Asset Management Unit also
Instead, it now uses a risk-based process
has announced a number of initiatives.
to identify and allow it to focus on firms
These include initiatives targeting: (1)
and activities posing enhanced risks to
In the wake of the SEC’s failure to detect
aberrational performance by hedge funds;
investors. The top substantive areas of
the $17.3 billion Ponzi scheme run by
(2) compliance programs; (3) mutual fund
focus for OCIE include:
Bernie Madoff, the SEC undertook a
fees; (4) problem advisers; (5) preferential
massive overhaul of its Enforcement
redemptions; (6) disclosure and valuation
Division. Among many other changes, the
issues in mutual fund bond portfolios; and
SEC created five specialization units. The
(7) private equity firms.
units with approximately 65 attorneys. The
Asset Management Unit works closely with
the Division of Investment Management
(IM) and with the Office of Compliance
• Verification and confirmation of assets;
The Office of Compliance
Inspections and Examinations
(OCIE)
relating to conflicts of interest,
valuation, risk, and expenses;
• Performance claims, with particular
focus on quantitative models;
Inspections and Examinations (OCIE). The
Like the Enforcement Division, OCIE,
• Sales of new and complex products;
unit also works closely with the Division
in the wake of the Madoff scandal, has
undertaken a broad self-assessment of its
• Risk management;
of Risk, Strategy and Financial Innovation
(RiskFin), with input from OCIE and IM,
strategy, structure, people, processes and
to come up with risk analytics to help it
technology, and it has initiated significant
identify potential securities violations.
reforms. As part of those reforms, OCIE is
In general, the Asset Management Unit has
indicated it will focus on issues arising in
the following areas: (1) valuation issues;
(2) conflicts of interest; (3) compliance
controls and governance; and (4) propriety
of products sold to investors. Since its
4
registrants;
• Disclosure issues, especially those
Asset Management Unit, led by Bruce
Karpati, is the largest of the specialized
• New hedge fund and private equity
Investment Management Update
implementing a National Exam Program,
• The firm’s control environment, that is,
whether internal controls are in place
to prevent fraud and other violations;
• Staff resources, particularly whether
which includes a national governance
a firm has adequate compliance
model and enhanced risk-focused exam
and internal audit staff, including
strategy. OCIE also created a centralized
designation of a chief compliance
Risk Assessment and Surveillance Unit to
officer and an internal auditor;
enhance the ability of the National Exam
Program to perform more sophisticated
• Be prepared;
• Be courteous and appropriately
cooperative;
• Have compliance and other
documents ready for review and
production;
• Review past deficiency letters and
ensure all deficiencies have been
addressed;
• Designate a person to act as the
contact for the Exam Staff;
• Prepare employees, including senior
• Fund governance, including oversight
to increase significantly in the coming
of risk at the board and senior
years. As a practical matter, once a matter
management levels;
is referred from OCIE to Enforcement,
• The firm’s portfolio management,
with an eye towards whether a firm’s
strategy and investment follow the
it becomes difficult to close before
Enforcement has conducted an extensive
investigation of the matter.
representations made to investors; and
• Indicia of fraud.
management, for Staff interviews;
• Correct potential misimpressions
promptly;
• Provide context where appropriate
for issues/documents that may raise
issues;
• Do not “clarify” or otherwise alter
Dealing with an Examination
When the Exam Staff conducts a review,
historical documents that raise issues;
• Maintain a log of documents
requested and provided;
While investment advisers should be
the investment adviser will get relatively
cognizant of all of OCIE’s areas of focus
little, if any, advance notice. Further, the
discussed above, they should pay
Staff has a list of documents and other
responses to Staff requests in a timely
particular attention to their compliance
information (much of which is standard
manner; and
controls. One of the first things that the
for all investment advisers) that it will
Exam Staff will review in assessing a firm
request for review and/or production. From
is its compliance program. If controls are
the viewpoint of an investment adviser,
weak or non-existent, examiners will devote
particularly one that has not had many, if
more resources to the exam.
any, dealings with the Staff, the process
• Provide documents and information
• Segregate privileged information.
Conclusion
can seem heavy-handed and burdensome,
Given the new risk-based approaches of
as well as a distraction to business.
the SEC and the new tools and information
Referrals to Enforcement
However, there may be no surer way of
it has available, investment advisers,
In FY 2011, 82 percent of investment
prolonging an exam (if not ensuring a
particularly those newly registered, need
adviser exams and 72 percent of
referral to Enforcement) than to be rude or
to be prepared for enhanced SEC scrutiny
investment company exams resulted
uncooperative with the Staff.
in the months and years to come. An
in a deficiency letter. In addition, in
approximately 10 percent of investment
adviser exams and seven percent of
investment company exams, OCIE made
a referral to Enforcement. In making
a referral, the OCIE Staff notifies the
Enforcement Staff of circumstances
suggesting a possible securities violation
worthy of investigation. Given the riskbased selection process that OCIE is now
using, the new aggressive approaches
taken by OCIE and Enforcement, and the
many new registrants, the percentage
of exams resulting in referrals is likely
appreciation of this enhanced scrutiny,
In general, an entity subject to an
along with an understanding of the SEC’s
examination needs to be cognizant of
areas of focus and a recognition of the
the impression it is giving the Staff.
importance of interacting effectively with
Misimpressions or miscommunications
the Staff, should help investment advisers
with the Staff can unnecessarily turn
avoid unnecessary pain and pitfalls in their
examinations into Enforcement referrals,
dealings with the SEC.
and investigations into Enforcement
actions. One cannot overestimate the
importance of dealing appropriately with
the Staff during the examination process.
Accordingly, simple as the following tips
may seem, they should not be overlooked
by any entity wanting to ensure as painless
an examination as possible:
Fall 2012
5
Use of Social Media by Fund Firms
By Lori L. Schneider
The evolution of social media sites like Facebook and Twitter into “must
have” marketing tools for many businesses has caused more and more
mutual fund firms to move away from an all-out self-imposed prohibition on
the use of social media for business purposes to permitting use of the sites
on at least some limited, controlled basis. In order to do so, advisers and
distributors of fund companies must carefully consider how social media
sites can be used by their employees, how they will monitor and supervise
the use of such sites, and how they will meet recordkeeping requirements
sites employees should be permitted to use,
how to use them and how to analyze and
address the risks to the firm.
Compliance policies and training on the use
of social media should be specific about
which social media sites, and features
of those sites, the firm has approved for
employee use. It is preferable to be explicit
given complex technology. This, in turn, requires their chief compliance
about some of the more common features
officers to consider whether their social media policies and procedures are
that are available and whether the use of
consistent with the existing guidance from the SEC and FINRA on the use of
those features are permitted or prohibited,
social media and related regulatory requirements.
and to encourage employees to ask before
Fund advisers generally are subject to the
FINRA guidance and related requirements,
guidance relating to social media issued
while others have separate procedures for
by the SEC for registered investment
the fund, the adviser and/or the distributor,
advisers — National Examination Risk Alert
respectively. (The term “fund firm” is used
“Investment Adviser Use of Social Media”
throughout this article to refer generally
published in January 2012 (National
to all three entities, although much of the
Exam Risk Alert). Fund distributors are
content posted on social media is likely
subject to the FINRA guidance relating
intended as “marketing” for which the
to social media for registered broker-
funds’ distributor would be responsible.)
dealers — Regulatory Notice 10-06, Social
Media Sites - Guidance on Blogs and
Social Networking Websites, published
in January 2010 (Regulatory Notice 1006), and Regulatory Notice 11-39, Social
6
the fund firm’s decision-making as to which
Which social media sites should
the fund firm allow and for
what business purposes?
Media Websites and the Use of Personal
Fund firms should first consider their
Devices for Business Communications -
business and marketing objectives in
Guidance on Social Networking Websites
determining how to use social media. For
and Business Communications, published
example, is the goal to increase the firm’s
in August 2011 (Regulatory Notice 11-39).
brand awareness to the general public or
As a practical matter, many fund firms that
is the goal to educate potential investors
have affiliated advisers and distributors
or other advisers or broker-dealers about
have one set of procedures relating to
different types of investment products?
social media that address both the SEC and
The answer to this question will help inform
Investment Management Update
using new features on firm-approved
sites. (For example, some investment
advisory firms are turning off LinkedIn’s
“Recommendations” on the firm’s LinkedIn
page or requiring employees to turn them
off on the employees’ LinkedIn pages
used for business purposes, because the
“Recommendations” could, depending on
the facts and circumstances, be viewed
as “testimonials” prohibited under the
Investment Advisers Act of 1940.) This
can be challenging for fund firms – new
sites emerge on a regular basis – and the
features of existing sites are constantly
evolving. Many firms have started requiring
employees to certify, on at least an annual
basis, that they understand, and are
complying with, the firm’s social media
policies and procedures.
What types of business
communications should the
firm permit?
searches that are based on sensitive
usage or commenting guidelines for
words or phrases that signal a problematic
clients or other third parties that are
communication. Fund firms should be
permitted to post on firm-sponsored
aware that the SEC could take the view
sites. In the National Exam Risk Alert, the
Another important question to address at
that interactive communications regarding
SEC’s Office of Compliance Inspections
the outset is whether the firm wants to allow
registered funds are subject to Rule 482
and Examinations cautioned advisers to
only “static” or passive communications
under the Securities Act of 1933 and the
consider adopting policies and procedures
or whether it wants to allow interactive
filing requirements of Section 24(b) of the
that address the posting of a prohibited
communications. With respect to fund
Investment Company Act of 1940.
“testimonial” – a statement of a client’s
distributors, FINRA has made clear in
Regulatory Notice 10-06 and Regulatory
Notice 11-39 that static communications
would be considered advertisements
that require pre-approval by a registered
principal. FINRA also has clarified that
interactive communications are equivalent
to “public appearances” and therefore can
be supervised using reasonable methods
of post-use review. (The SEC recently
adopted FINRA’s proposed rule change
relating to communications with the public,
which will categorize participation in an
interactive electronic forum as a “retail
communication” (assuming the forum is
generally available to the public) subject
to the same supervision requirements
that apply to “correspondence.” Those
supervision requirements permit a post-use
review. The effective date of the new rule
is February 4, 2013.) Fund advisers, in
contrast, are not subject to the same preapproval requirements for static content
that apply to broker-dealers. However, the
SEC’s Office of Compliance Inspections
and Examinations noted in its National
Exam Risk Alert that advisers may want
to consider the appropriateness of preapproving content as opposed to reviewing
it after-the-fact.
What does it mean to
supervise interactive
communications and how
often should it be done? While the interactive nature of social
media is one of its more attractive
features, new challenges arise that must
be addressed before a fund firm ventures
into this territory. In addition to figuring
out a reasonable method of supervising
and monitoring the communications, a
fund firm should attempt to anticipate
potential issues that may arise during
interactive sessions on a social media site
and implement procedures to deal with
those issues on a real-time basis, when
necessary, or prevent them from occurring
in the first place. Issues to be considered
might include the posting during an
interactive session of any of the following
by either an outside party or an employee
of the firm: negative comments about
experience with, or endorsement of, an
investment adviser. As a result, many fund
firms include a “no testimonials” rule in
their commenting guidelines clarifying that
industry regulations prevent the posting
of comments about how well an investor
has done by investing with the firm or
its products. The FINRA rule relating
to “testimonials” which applies to fund
distributors, in contrast, does not prohibit
the use of testimonials, but does require
the following disclosures: the fact that the
testimonial may not be representative of
the experience of other clients; the fact that
the testimonial is no guarantee of future
performance or success; and, if more than
a nominal sum is paid for the testimonial,
the fact that it is a paid testimonial.
the firm, a client’s personal information,
Firms should consider establishing
a fund’s current portfolio holdings, inside
processes for screening third-party
information about specific securities that
content based on the expected usage and
could raise insider-trading concerns, or a
frequency of third-party posts and should
question by a client or a potential client
disclose on the site their policies regarding
that could raise suitability concerns.
responsibility for third-party posts. Many
Procedures designed to address these
firms include specific disclaimers on their
concerns may require the firm to review
social media pages clarifying that any
the content prior to allowing it to post,
comments posted by third parties are those
live-monitoring and/or quick removal of
of the persons submitting them and do
the content from the site, or the posting
not represent the views of the firm or an
of firm contact information where the
endorsement by the firm.
client or potential client can obtain more
personalized advice.
How will the firm deal with
third-party postings and links?
Some fund firms may choose to adopt
Once a firm determines to allow third-
procedures that require review of some or
party postings on its social media site, it
all interactive electronic communications
must consider the types of policies and
prior to use, while others may adopt
procedures concerning third-party postings
“risk-based” methods of post-use review,
it needs to implement to avoid violations of
including sampling or lexicon-based
the federal securities laws. For example,
If a third-party post is attributable to the
firm, the firm must make sure that the
post complies with applicable rules on preapproval/supervision and recordkeeping.
The FINRA Regulatory Notices are
Continued on page 16
firms should look to establish appropriate
Fall 2012
7
The Search for Systemic Risk Turns to
Money Market Mutual Funds
By: Daniel F. C. Crowley, Karishma S. Page, Collins R. Clark and Andrés Gil
For over two years, leadership at the SEC debated systemic reform of the
money market mutual fund (“MMMF”) industry. Reform options included
requiring MMMFs to adopt a floating net asset value or maintain capital
treated as a single Eligible Company for the
purposes of a SIFI designation.
buffers coupled with redemption restrictions to avoid “breaking the buck” in a
According to the FSOC, the Guidance is
future financial crisis. Facing stiff opposition from other commissioners, SEC
not binding. An Eligible Company that
Chairman Mary Schapiro announced August 22, 2012 that the SEC would
not put forward its MMMF reform proposal for public comment. Responding
to Schapiro’s announcement, Treasury Secretary Timothy Geithner has urged
does not meet the thresholds outlined in
the Guidance could be designated a SIFI
“based on other firm-specific qualitative
or quantitative factors.” This reservation
the other members of the Financial Stability Oversight Council (“FSOC”)
of authority is particularly important for
to take up the MMMF reform effort. The FSOC members have a number of
MMMFs because three of the five tests in
authorities they could use to impose reforms on individual MMMFs or on the
Stage 1 focus on evaluating the outstanding
entire MMMF industry, but one of the most unique options is designating one
debt of an Eligible Company and are,
or several MMMFs as systemically important financial institutions (“SIFIs”).
If designated a SIFI, an MMMF would be
designation (the “Guidance”) outlines three
subject to enhanced prudential supervision
stages of review and various quantitative
by the Federal Reserve Board (“FRB”),
and qualitative metrics the FSOC will apply
including capital and liquidity requirements.
to determine when an Eligible Company
This article summarizes the process for
should be designated a SIFI. After FSOC
designating an MMMF as a SIFI and the
staff analyzes an Eligible Company in all
consequences of such a designation.
three stages outlined in the Guidance, the
FSOC must follow procedural requirements
The SIFI Designation Process
outlined in Dodd-Frank to designate a firm
Under the Dodd-Frank Wall Street Reform
and the statutory procedural requirements
and Consumer Protection Act (“Dodd-
are summarized in the chart on page 9.
a SIFI. The three stages from the Guidance
Frank”), the FSOC may designate a firm a
SIFI if its material financial distress, or the
nature, scope, size, scale, concentration,
interconnectedness, or mix of its activities,
could pose a threat to the financial stability
of the United States. A firm eligible for
SIFI designation (an “Eligible Company”)
is one that is “predominantly engaged
in financial activities.” The FSOC’s
interpretive guidance for nonbank SIFI
8
investment company complex, could be
Investment Management Update
Key Considerations for MMMFs
The Guidance states that the FSOC may
disregard separate corporate identities
to aggregate the “risks posed by
separate funds that are managed by the
same adviser, particularly if the funds’
investments are identical or highly similar.”
In the context of the MMMF industry,
several funds, and perhaps an entire
therefore, inapplicable because MMMFs
do not issue debt and are not leveraged.
Furthermore, the Stage 1 thresholds for
credit default swaps and outstanding
derivatives liabilities have limited application
to MMMFs because MMMF investment in
derivatives is very limited. Consequently,
absent a proactive approach on the part of a
possible SIFI designee, an MMMF may not
be aware that it is subject to consideration
for SIFI designation until it receives formal
notice from the FSOC. By that time, the
FSOC staff may have performed much of
its analysis for recommending a MMMF be
designated a SIFI.
Recognizing that the Stage 1 thresholds in
the Guidance do not apply well, the FSOC
has stated that it is determining whether
“additional guidance regarding potential
metrics and thresholds” is appropriate for
measuring the systemic risk of the asset
management industry. Like the Guidance,
however, any additional guidance developed
specifically for the asset management
industry may not be binding on the FSOC.
Regulation as a SIFI
Finally, Dodd-Frank does not require that
After formal designation, a SIFI will
established before an Eligible Company is
be subject to the FRB’s enhanced
designated a SIFI. Absent clarification from
prudential standards. As proposed, these
the FRB, a MMMF could be designated
standards will impose risk-based capital
a SIFI, after which the FRB could then
requirements and leverage limits on
implement MMMF reforms similar to those
SIFIs, which are likely to be inappropriate
recently considered by the SEC.
the enhanced prudential standards be
or unworkable in the context of MMMFs.
The FRB has discretion to tailor or
“scale” prudential regulation on an
individual basis or by industry category,
but the proposed prudential standards
do not identify any areas where
individual tailoring would be appropriate.
Furthermore, the FRB has noted that
Dodd-Frank limits their ability to tailor
prudential regulations, especially with
respect to capital requirements.
Conclusion
The SEC’s refusal to propose Schapiro’s
MMMF reform package for public comment
does not end the MMMF reform debate.
Instead, it appears to have invited the FSOC
to join it. The MMMF industry should
take note of the FSOC’s powers, including
SIFI designation, and recognize that the
exercise of those powers is more than a
theoretical possibility.
Fall 2012
9
In the wake of the UCITS IV Directive,
the Bank of Italy’s new regulation
continued from page 1
The Implementation of UCITS IV
Directive in Italy
Towards Recovery of the Competitive Gap
contemplates and facilitates
mergers between harmonized funds
established in different EU countries.
The merger is subject to prior
authorization by the authority of the
member state where the merging fund
(i.e., the fund that ceases to exist after
In the last few months, Italy has commit-
• Expanded EU passport for
the merger) is established. While no
ted to change this course. The process of
management companies: Under
approval is required from unit-holders,
implementation of EU Directive 2009/65/
the old regime, only a management
they have a right to reimbursement as
EC (the so called “UCITS IV Directive”)
company established in Italy
a consequence of the merger they do
has been the opportunity for the Italian
(società di gestione del risparmio,
not intend to join. A similar regulation
Parliament and Government to pass a
or SGR) was authorized to manage
for fund demergers (i.e., spinoffs, both
comprehensive reform of the mutual fund
a domestic mutual fund. As a
domestic and cross-border) has been
set of legislation, including issues beyond
consequence, foreign players eager
put in place.
the scope of the UCITS IV Directive, which
to access the Italian market were
will have an impact on the entire mutual
essentially left with the only options
fund industry.
of either acquiring an Italian SGR
or placing their own (foreign) funds
More specifically:
• Law No. 10 of February 26, 2011,
aligned the taxation regime applicable
to mutual funds to that of most other
through an offering in Italy.
The implementing measures
broaden this array of opportunities
We are aware of clients already
profiting from new merger rules
in order to “repatriate” to Italy
foreign UCITS schemes, previously
established abroad for tax reasons.
• Master-feeder structures: The UCITS
IV Directive defines “feeder UCITS” as
for EU-licensed management
collective investment undertakings that
companies, which are now
invest more than 85% of their assets
authorized to set up an Italian
in units issued by a “master” fund. So
harmonized mutual fund with no
far, master-feeder structures have not
16, 2012, implemented the UCITS IV
intermediation of a domestic entity
been recognized in Italy, although they
Directive and modified other tax and
and without the need of establishing
may constitute a powerful instrument
bankruptcy rules (the new rules came
a branch in Italy. Under the “home
of flexibility, client growth and
into force on May 13, 2012);
country control” rules, while the
marketing efficiency.
EU competitors (the new regime
came into force on July 1, 2011);
• Legislative Decree No. 47 of April
• On May 8, 2012, the two authorities
supervising the industry (Bank of Italy
and Consob) enacted measures which
implement the EU rules in greater
detail (the new rules are already
effective).
managed fund is regulated by Italian
law (in compliance with EU common
While the UCITS IV Directive allows the
principles), the management
setup of master-feeder structures for
company’s home member state
harmonized (open-end mutual) funds,
authority is responsible for
subject to the fulfillment of cooperation
supervising the latter.
and information requirements, the
newly-issued Bank of Italy regulation
It is expected that, by eliminating
extends the EU rules to both
foreign/domestic duplicative
harmonized and non-harmonized
structures, the new regime will
funds, provided that the master and
dismantle a costly barrier to the
the feeder funds invest in the same
entry of foreign players in the Italian
The recent reforms impact the existing
class of assets. Thus, the efficiency
market. Equal opportunities are
regulation in a variety of aspects. Below
benefits from master-feeder structures
provided to Italian managers for their
we focus on those issues that we consider
are also extended to mutual funds not
expansion to other EU markets.
included in the Directive’s scope, such
Main changes to the Italian mutual fund industry after the UCITS
IV Directive implementation
of greater importance for foreign (EU and
non-EU) players interested in establishing or acquiring a collective investment
undertaking in Italy, as well as operating in
the country through their own management
companies.
• Cross-border fund mergers and
spinoffs: In the past, Italian law only
provided for a regulation of mergers
between domestic mutual funds.
Cross-border mergers were only
episodically entered into, amid legal
and regulatory uncertainties.
10
Investment Management Update
as closed-end funds, including real
estate funds.
• Fund liquidation: The Italian reform
introduces a brand-new regulation for
Preliminary conclusions
insolvent funds. Prior to the reform,
Some preliminary conclusions may be drawn,
an insolvent fund—which cannot
while we expect to evaluate how the new
be declared bankrupt—could be
regulation will be enforced by the authorities
liquidated only upon the investors’ or
and assessed by the market players.
the management company’s initiative.
Under the new rules, a creditor may
file a petition for liquidation with
the court in which the management
company is established. The court
may order the fund’s liquidation if it
deems that a potential prejudice to
creditors exists.
As to the Italian players, the new
opportunities summarized above—
together with other important changes
to risk management and public-offering
regulation—demand an effort to elaborate
cross-border strategies and stay tuned
with enhanced compliance, internal audit
and risk management requirements. On
Considering the current credit crunch,
the other hand, the recent reform deploys
this piece of reform should, together
a variety of instruments to rationalize the
with debit’s fund structures (fondi di
existing collective investment structures,
debito), encourage the financing of
internationalize the client portfolio, and
real estate projects realized through
increase the funds’ size.
mutual fund structures.
• Tax issues: The 2011 collective
Non-Italian institutions, including both EU
and non-EU institutions, should consider
investment tax reform eliminated a
the benefits which arise from an increased
competitive gap which in the past
competitiveness of the Italian rules and
represented a burden on the Italian
evaluate the opportunities which stem from
fund industry. Since July 1, 2011, a
a simplified and more standardized access
(now 20%) withholding tax is levied on
to the Italian market and clients.
profits realized by a resident investor
in a mutual fund (namely, capital
gains), while, beforehand, the tax was
charged upon the fund, proportionally
to the increase of the net asset value
of the fund at the end of the tax year.
Non-resident investors are tax-exempt,
limited to those profits that have
“accrued” during the investment
period, and provided that their country
of residence is not blacklisted under
Italian tax haven regulation.
Fall 2012
11
explicit requirements tend to focus on
correspondent accounts and private
continued from page 1
banking accounts, each of which
FinCEN Explores Adding New Explicit
Customer Due Diligence Requirements to
Current AML Requirements
historically has presented a high risk
for money laundering. As noted by
FinCEN, some level of CDD is necessary
as a practical matter to identify high risk
customers and to make an AML Program
and suspicious activity reporting work in
practice; however, the amount and depth of
CDD tends to vary widely based on industry
The proposed CDD requirements would
profile that can then be used by the financial
(typically greater in the banking industry
initially apply to banks, broker-dealers,
institution to identify higher-risk customers
than in the securities industry) and the
mutual funds, futures commission
and accounts. In other words, financial
level of intermediation and the nature of
merchants and introducing brokers.
institutions must know their customers
the intermediary (i.e., is the intermediary a
FinCEN, however, is considering extending
and the money laundering risks presented
financial institution subject to the BSA).
the CDD requirements to apply to all
by their customers’ activities. Given the
financial institutions that are currently
evolving landscape of AML compliance,
required to maintain AML programs,
financial institutions should also keep in
including money services businesses,
mind that the focus of AML Programs
insurance companies, casinos, dealers in
continues to expand from identifying
precious metals and jewels, and non-bank
traditional money laundering activity to
mortgage lenders and originators.
identifying other types of financial crimes,
Although a codified CDD rule is still far
including securities fraud and tax evasion.
In the Proposal, FinCEN has set forth
the four elements it believes should be
included in an effective CDD program:
(1) Conducting initial due diligence
on customers, which includes
identifying the customer and verifying
the customer identity at the time the
account is opened (currently required
off and the final form far from certain,
As noted in the Proposal. FinCEN takes
under the Customer Identification
the Proposal does summarize FinCEN’s
the view that, despite a CDD obligation it
Program (“CIP”) regulations);
current expectations for CDD. At a
believes to be implicit in BSA requirements,
(2) Understanding the purpose and
minimum, financial institutions should
issuing an explicit CDD rule that requires
intended nature of the account, and
compare FinCEN’s expectations set forth
financial institutions to perform CDD,
expected activity associated with the
in the Proposal with their current anti-
including an obligation to categorically
account for the purpose of assessing
money laundering compliance program
obtain beneficial ownership information,
risk and identifying and reporting
(“AML Programs”) and related compliance
may be necessary to protect the United
suspicious activity;
practices. The comment period on the
States financial system from criminal abuse
Proposal closed on June 11, 2012. FinCEN
and to guard against terrorist financing,
is planning on holding a series of public
money laundering and other crimes.
meetings, starting July 31, 2012, to continue
FinCEN also notes that in the event a
to gather public comment on the Proposal.
financial institution files a Suspicious
Activity Report (“SAR”), CDD information
(3) Except as otherwise provided,
identifying the beneficial owners of all
customers, and verifying the beneficial
owner’s identity pursuant to a riskbased approach; and
collected could enhance the information
(4) Conducting ongoing monitoring
Background
included in the SAR filing and thereby
of the customer relationships and
enhance law enforcement’s ability to
conducting additional CDD as
As noted in the Proposal and reflected in
initiate and pursue the investigation and
appropriate, based on such monitoring
prior guidance and enforcement actions,
prosecution of criminal activity.
and scrutiny, for purposes of identifying
and reporting suspicious activity.
FinCEN believes the “cornerstone of a
strong BSA/AML compliance program is the
adoption and implementation of internal
controls, which include comprehensive
CDD policies, procedures and processes
for all customers, particularly those that
present a high risk for money laundering
or terrorist financing.” FinCEN goes on to
say that an effective CDD program should
provide a financial institution with sufficient
information to develop a customer risk
12
Investment Management Update
Certain customers are currently exempt
CDD to Date and What
Additional CDD Requirements
May Look Like in the Future
from CIP (e.g., existing customers opening
To date, there are few explicit requirements
customers would not be exempt from the
under the BSA’s implementing regulations
requirement to understand the nature and
that require CDD or mandate obtaining
purpose of the account and to identify
beneficial ownership information. Such
the beneficial owner of the account. The
new accounts and readily identifiable
customers such as banks and brokerdealers); however, those CIP exempt
requirement to understand the purpose
and intended nature of the account and
not an individual, the financial institution
unintended cracks in the AML regime.
expected activity associated with the
will obtain information about individuals
Furthermore, ownership information
account will be particularly challenging to
with authority or control over the account.
received may be difficult to confirm or
mutual funds because mutual funds do
Accounts subject to such additional due
verify. As noted in the ICI Letter, for
not have an obligation to determine the
diligence are often identified as “high risk”
most entities organized under U.S. law,
suitability of an investment in the fund and
by the financial institution and are often
beneficial ownership information is not
therefore would have little perspective on
subject to additional monitoring during the
publicly available because states largely do
the purpose of the account or expected
life of the account.
not require entities to disclose the identity
account activity. Broker-dealers that
do not recommend securities to their
clients (e.g., online brokerage firms) and
unsolicited securities transactions present
similar challenges. Furthermore, given
the intermediated nature of the mutual
fund industry today, mutual funds often do
not have access to the type of information
contemplated under the Proposal,
especially with respect to indirect investors.
As noted in an Investment Company
Institute comment letter on the Proposal
(the “ICI Letter”), mutual funds and their
transfer agents currently have processes
and controls that take into consideration
the risk associated with customer
relationships established with a mutual
fund; however, the requirements and
activities contemplated under the Proposal
greatly exceed existing requirements and
industry practice.
New Categorical Duty to Identify
Beneficial Owners
In the Proposal, FinCEN is considering
expanding the requirement to obtain
beneficial ownership information to
all customers. This element of the
contemplated CDD rule states:
Except as otherwise provided, financial
institutions shall identify the beneficial
owner(s) of all customers, and verify the
beneficial owner’s identity pursuant to a
risk-based approach.
For purposes of the expanded duty to
identify beneficial owners, FinCEN is
considering a definition of “beneficial
owner” that would in the case of a legal
entity include:
(1) Either:
would render the exemption of certain
financial institutions from CIP requirements
useless. For example, what would be the
point for excluding a broker-dealer from
a financial institution’s CIP if one were
required to identify the owner(s) of the
broker-dealer.
FinCEN’s approach to beneficial ownership
ignores a significant feasibility question. As
noted by the Financial Services Roundtable:
It would not be feasible to impose
broad-based beneficial ownership
requirements on U.S. financial
in the absence of Congressional
legislation requiring the collection of
relationship, intermediary, tiered entity,
beneficial ownership information at
or otherwise, owns more than 25
the time legal entities are created in
percent of the equity interests in the
the United States. Likewise, it would
entity; or
not be feasible to impose broad-based
example, the current CIP rules focus on the
directly or indirectly, through any
actual customer and not on the customer’s
contract arrangement, understanding,
owners or beneficiaries of the account. In
relationship, intermediary, tiered entity,
only two circumstances does current law
or otherwise, has at least as great an
expressly require a financial institution
equity interest in the entity as any
to look through the customer and obtain
other individual; and
addition to these explicit requirements,
information with respect to all customers
contract arrangement, understanding,
satisfies (a), then the individual who,
offering private banking accounts. In
institution to obtain beneficial ownership
directly or indirectly, through any
at the financial institution’s customer. For
foreign financial institutions and when
potential issue is that requiring a financial
institutions for U.S. legal entities
(b) If there is no individual who
offering correspondent accounts for certain
are incorporated or organized. Another
(a) Each of the individuals who,
Current CDD requirements generally stop
beneficial ownership information—when
of their beneficial owners at the time they
beneficial ownership requirements
on U.S. financial institutions dealing
with foreign legal entities and foreign
financial institutions in the absence
of the implementation of comparable
international standards.
Nevertheless, here we are.
The proposed definition of beneficial
(2) The individual with greater
owner is designed to identify the beneficial
responsibility than any other individual
owner of the customer as distinct from
for managing or directing the regular
the beneficial owners of the assets in
affairs of the entity.
an account. FinCEN acknowledges that
a financial institution’s CIP must address
Given the convoluted definition of beneficial
situations where, based on the financial
owner, it may be difficult for financial
institution’s risk assessment of a new
institutions to explain the definition of
account opened by a customer that is
beneficial owner to their customers in a
retail account application and could lead
to inconsistent application of the definition
by financial institutions thus creating
there may be instances in which obtaining
information about the beneficial owners of
assets in the account may be warranted
instead (e.g., where an intermediary
opens an account for the benefit of its
customers). In the Proposal, FinCEN
recognizes a weakness in the wording
used, noting that it would not capture
Fall 2012
13
the beneficial owners of assets held in an
both identification and verification of
institution will need to manually obtain
account opened by a financial intermediary
the beneficial owner. Finally FinCEN
the information, will need to spend
or agent. The intermediary or agent would
anticipates providing guidance regarding
significant time explaining to customers
be the financial institution’s customer, so
what to do in the event one is unable
the definition of beneficial ownership
the beneficial owners reported would be
to identify or verify a beneficial owner.
and will need to expend greater effort
those of the intermediary or agent, not the
FinCEN is also contemplating how to treat
on prospective customers who are not
beneficial owners of the assets. Without
existing customers under a new CDD rule.
forthcoming, and will likely not be able
proposing specific language, FinCEN has
to confirm the information provided in a
asked for comment on how to address this
meaningful way. Intermediated accounts
A Few Final Thoughts
may provide further operational challenges
mutual funds, given that more and more
Any expansion to the requirement to
the contemplated new regime and leaves
assets are held in omnibus accounts. A
obtain beneficial ownership information
existing practices in place on issues of
new “look through” requirement here would
will be a “sea change,” especially for the
“look-throughs.” Finally, the Proposal is
run contrary to current requirements and
securities industry because it typically does
a significant shift from the existing “risk-
practices and present significant operational
not maintain correspondent and private
based” approach to a categorical approach.
issues similar to the ones raised in the SEC’s
banking accounts and has historically
Such a categorical approach would be
“pay-to-play” rules as initially applied to
not been geared up to obtain beneficial
inconsistent with the approach that FinCEN
intermediated accounts.
ownership information except in high risk
and the other federal regulatory agencies
situations or when explicitly required to
have espoused for many years and have
do so. One of the significant challenges
confirmed as recently as March 2010 in
to complying with a requirement to obtain
their guidance statement on obtaining
beneficial ownership information is the
beneficial ownership information.
“potential vulnerability.” FinCEN’s approach
to this issue could be particularly acute for
As noted in the Proposal, FinCEN anticipates
that it would provide additional guidance
regarding customers that may be considered
low risk (and therefore potentially exempt
for purposes of the beneficial ownership
requirement) as well as identifying types
of customers that may simply necessitate
identification of the beneficial owner and
those that are of heightened risk requiring
14
Investment Management Update
general lack of public repositories of
such information, which means that, as a
practical matter, every time a partnership,
limited liability company, trust or nonpublic corporation opens an account
with a financial institution, the financial
unless FinCEN clearly excludes them from
Undoubtedly, the Proposal will not be
the last word on CDD and the issue of
beneficial ownership in the context of
AML compliance.
continued from page 3
contemporaneously with the Plan and
Trading and Markets Corner
stated that this would be a separate
process.
• What type of records will the market
some options exchanges may reject all
participant make and maintain
systems respond when an NMS stock
options market orders if the underlying
regarding their compliance with
is in or approaching a Limit State, and
NMS stock is in a Limit State, while
the Plan?
are any systems and recordkeeping
other exchanges may reject only
changes needed?
orders on the same side of the market
• How do execution management
• What type of internal training is
needed? One size may not fit all.
that caused the Limit State.
• Are there communications
latencies with exchanges, clients,
• Will any educational information be
• If the market participant is a trading
provided to clients?
counterparties, or vendors that will
center, are its policies and procedures
need to be managed?
reasonably designed to prevent the
The SEC will accept comments on both
execution of trades and display of
pilot programs during their duration.
• How will basket trading be handled if
some, but not all, of the securities in
the basked are in a Limit State?
• Are any blocks or flags needed for
equity derivatives or other trading
strategies to account for any trading
pause in the cash security? For
quotations outside of the applicable
price bands?
• Are any changes needed to the
A version of this article was previously
published and is available at
http://accelus.thomsonreuters.com/.
market participant’s error policy and
clearly erroneous procedures? Note
that the stock exchanges declined to
modify their clearly erroneous policies
example, the SEC has noted that
Table 2: Comparison of old and revised market-wide circuit breakers
Summary of Changes
Old
Revised
Change of reference index
Dow Jones Industrial Average
S&P 500® Index
More frequent calculation of the
trigger values
Each calendar quarter
Daily
Reduced market decline trigger
percentages
10%, 20% and 30%
7%, 13% and 20%
Level 1
Halt
Market Decline Trigger: 10%
Market Decline Trigger: 7%
Before 2:00 p.m.: one hour
At or after 2:00 p.m., but before 2:30
p.m.: 30 minutes
Before 3:25 p.m.: 15 minutes
At or after 3:25 p.m.: trading
continues unless there is a Level 3 halt
At or after 2:30 p.m.: trading continues
unless there is a Level 2 halt
Revised schedule of trading halts
with shorter durations and lower
market decline triggers
Level 2
Halt
Market Decline Trigger: 20%
Market Decline Trigger: 13%
Before 1:00 p.m. – two hours
Before 3:25 p.m.: 15 minutes
At or after 1:00 p.m., but before 2:00
p.m.: one hour
At or after 3:25 p.m.: trading
continues unless there is a
Level 3 halt
At or after 2:00 p.m.: – trading is halted
and does not resume for the rest of the day
Market Decline Trigger: 30%
Level 3
Halt
At any time: trading is halted and does
not resume for the rest of the day
Market Decline Trigger: 20%
At any time: trading is halted and
does not resume for the rest of the day
Fall 2012
15
continued from page 7
Use of Social Media by Fund Firms
instructive as to when the content of a third-
relate to their “business as such.”
party post may become attributable to the
This includes internal and external
firm based upon the SEC’s “entanglement”
business communications sent by, as
theory (i.e., the firm was involved in the
well as those received by, the firm.
preparation of the third-party post or paid
Under Investment Company Act rules,
for it) or the “adoption” theory (i.e., the
registered investment companies must
firm has adopted the third-party post, for
keep records of any advertisement
example, by explicitly or implicitly endorsing
or other sales literature intended for
it). A link to a third-party site also can
prospective investors.
be attributed to the firm based on these
theories. With respect to a firm’s posting of
third-party links (such as a link to an article
from a newspaper), Regulatory Notice 11-39
clarifies that firm policies and procedures
should prohibit the establishment of a link
to any third-party site that the firm “knows
or has reason to know contains false or
misleading content.” This necessitates a
careful review prior to posting.
What records must be kept of
any posts on social media sites?
Fund firms must be prepared to
comply with applicable recordkeeping
requirements with respect to social media
communications under the Investment
Advisers Act of 1940, the Investment
Company Act of 1940, the Securities
Exchange Act of 1934, and the rules
thereunder, as well as applicable FINRA
rules. The records must be retained
for specified time periods and must be
retrievable during that time. The content
of the communication determines whether
a record of the communication must
be kept. Under the Advisers Act rules,
registered investment advisers must
keep records relating to their advisory
business – the adviser’s recommendations
or advice. Similarly, registered brokerdealers are required under the Securities
Exchange Act rules and FINRA rules to
retain records of communications that
16
Investment Management Update
Firms that permit employees to use
“personal” smart phones or computers
for firm business communications
should consider whether the firm is able
to retain, retrieve and supervise those
communications. Many firms have hired
third-party vendors that specialize in the
retention of records on social media sites.
Due to the numerous regulatory
requirements implicated by social media
use, firms are well-advised to organize a
task force of the appropriate personnel
from sales and marketing, legal and
compliance, information technology and
senior management who can develop
a social media strategy and a plan for
addressing the regulatory requirements
prior to allowing employees to use social
media for business purposes. Firms
also should consider other areas of the
law that are implicated when employees
use social media, such as privacy or
labor and employment laws.
Investment Management Events
Please visit our website at www.klgates.com for
more information on the following upcoming
investment management events in which
K&L Gates attorneys will be participating:
Clifford J. Alexander, Ndenisarya M. Bregasi and
Michael S. Caccese: National Society of Compliance
Professionals Annual Meeting, October 22, 23 and 24, 2012,
Washington, D.C.
Michael S. Caccese:
Marketing by Investment Advisers,
ACA Compliance Group webcast, October 25, 2012
Anthony R. G. Nolan:
Master Class on Risk-Based
Banking and Capital Market Regulation, Global Association of
Risk Professionals, October 25, 2012, New York, NY
Cary Meer:
IAA Compliance Workshop, Investment Adviser
Association, October 30, 2012, New York, NY
Stephen J. Crimmins and K. Susan Grafton:
Hedge Fund Enforcement and Regulatory Developments 2012,
Practising Law Institute, October 31, 2012, New York, NY
Mark Perlow:
IAA Compliance Workshop, Investment Adviser
Association, December 4, 2012, San Francisco, CA
Cary Meer:
2012 Securities Law Developments Conference,
Investment Company Institute, December 12, 2012,
Washington, D.C.
Fall 2012
17
Please join us for our Live Seminar and Webinar
Competing Globally in the Asset Management Industry
Tuesday, October 16, 2012, K&L Gates Boston
and via Webinar, 8:30 a.m. to 10:00 a.m.
What issues do investment advisers need to address when offering services and funds
worldwide? This event will answer that question and many more. Our panel will focus on
a few key jurisdictions and how you can penetrate their marketplace
Speakers:
Sean P. Donovan-Smith, Partner, K&L Gates, London
Stuart E. Fross, Partner, K&L Gates, Boston
Nicholas S. Hodge, Partner, K&L Gates, Boston
Choo Lye Tan, Partner, K&L Gates, Hong Kong
To register for the live program or webinar, please go to www.klgates.com/events.
Please join us for our Live Seminar and Webinar
FATCA’s Impact on the Fund Industry
Friday, October 19, 2012, K&L Gates Boston and via Webinar 8:30 a.m. to 10:00 a.m.
Fund managers are beginning to focus on how the Foreign Account Tax Compliance Act’s
information reporting and withholding tax rules will impact their funds’ operations and
their investors. This program will cover key developments and emerging issues in the
FATCA regime.
Speakers:
Mary Burke Baker, K&L Gates Government Affairs Advisor, Washington, D.C.
Joel D. Almquist, Tax Partner, K&L Gates, Boston
To register for this program, please go to www.klgates.com/events.
18
Investment Management Update
2012 Investment Management Conferences
At these conferences, lawyers from our Investment Management practice will
discuss a broad range of topics and practical issues. Each program will also focus
on current issues confronting the investment management industry, including the
regulatory changes that arise from the Dodd-Frank Act and numerous SEC initiatives.
Register online at www.klgates.com/events.
Tuesday and Wednesday, October 30 and 31
Live at K&L Gates Washington, D.C. and video
conferenced to K&L Gates Charlotte, K&L Gates
Dallas, K&L Gates Miami, K&L Gates Newark and
K&L Gates Pittsburgh
Friday, November 2
Live at K&L Gates Boston
Thursday, November 8
Live at K&L Gates Chicago
Wednesday, November 28
Live in San Francisco and video conferenced
to K&L Gates Los Angeles, K&L Gates Orange
County, K&L Gates San Diego and K&L Gates
Seattle
Wednesday, December 5
Live in New York
Please join us for our Webinar
The Nuts and Bolts of Form PF
Tuesday, October 23, 2012, 2:00 p.m. to 3:00 p.m.
Many larger private fund advisers have now filed Form PF which will be used to collect
information from private fund advisers to determine the potential systemic impact of the
investment activities of private funds and their advisers. Our comprehensive webinar will
address lessons learned from the form filings that have been made.
Speakers:
Kay Gordon, Partner, K&L Gates, New York
Carolyn Jayne, Partner, K&L Gates, Chicago
Michael McGrath, Counsel, K&L Gates, Boston
Shoshana Thoma-Isgur, Of Counsel, K&L Gates, Fort Worth
To register for this program, please go to www.klgates.com/events.
Fall 2012
19
To learn more about our Investment Management practice, we invite you to contact one of the lawyers listed below, or visit www.klgates.com.
Austin
Robert H. McCarthy, Jr.
512.482.6836
robert.mccarthy@klgates.com
Boston
Joel D. Almquist
Michael S. Caccese
Mark J. Duggan
Stuart E. Fross
Mark P. Goshko
Nicholas S. Hodge
Clair E. Pagnano
Trayne S. Wheeler
George Zornada
617.261.3104
617.261.3133
617.261.3156
617.261.3135
617.261.3163
617.261.3210
617.261.3246
617.951.9068
617.261.3231
joel.almquist@klgates.com
michael.caccese@klgates.com
mark.duggan@klgates.com
stuart.fross@klgates.com
mark.goshko@klgates.com
nicholas.hodge@klgates.com
clair.pagnano@klgates.com
trayne.wheeler@klgates.com
george.zornada@klgates.com
Chicago
Cameron S. Avery
Paul H. Dykstra
David P. Glatz
Alan P. Goldberg
Carolyn A. Jayne
Thomas F. Joyce
D. Mark McMillan
Paulita A. Pike
Rita Rubin
Donald S. Weiss
312.807.4302
312.781.6029
312.807.4295
312.807.4227
312.807.4299
312.807.4323
312.807.4383
312.781.6027
312.807.4417
312.807.4303
cameron.avery@klgates.com
paul.dykstra@klgates.com
david.glatz@klgates.com
alan.goldberg@klgates.com
carolyn.jayne@klgates.com
thomas.joyce@klgates.com
mark.mcmillan@klgates.com
paulita.pike@klgates.com
rita.rubin@klgates.com
donald.weiss@klgates.com
Fort Worth
Scott R. Bernhart 817.347.5277
scott.bernhart@klgates.com
Shoshana L. Thoma-Isgur 817.347.5280
shashana.thoma-isgur@klgates.com
London
Sean P. Donovan-Smith
+44.20.7360.8202
sean.donovan-smith@klgates.com
+44.20.7360.8123
philip.morgan@klgates.com
Philip J. Morgan
Los Angeles
William P. Wade
310.552.5071
william.wade@klgates.com
New York
Kay A. Gordon
212.536.4038
kay.gordon@klgates.com
Beth R. Kramer
212.536.4024
beth.kramer@klgates.com
Orange County
949.623.3535
gordon.peery@klgates.com
Gordon F. Peery
Raleigh
F. Daniel Bell III
919.743.7335
dan.bell@klgates.com
San Francisco
Kurt J. Decko
415.249.1053
kurt.decko@klgates.com
J. Matthew Mangan
415.249.1046
matt.mangan@klgates.com
David Mishel
415.249.1015
david.mishel@klgates.com
Mark D. Perlow
415.249.1070
mark.perlow@klgates.com
Richard M. Phillips
415.249.1010
richard.phillips@klgates.com
Taipei
Christina C. Y. Yang
+886.2.2175.6797
christina.yang@klgates.com
Washington, D.C.
Clifford J. Alexander
202.778.9068
clifford.alexander@klgates.com
Diane E. Ambler
202.778.9886
diane.ambler@klgates.com
Mark C. Amorosi
202.778.9351
mark.amorosi@klgates.com
Catherine S. Bardsley
202.778.9289
catherine.bardsley@klgates.com
Ndenisarya M. Bregasi
202.778.9021
ndenisarya.bregasi@klgates.com
Yoon Y. Choo
202.778.9340
yoon.choo@klgates.com
Beth Clark
202.778.9432
beth.clark@klgates.com
Daniel F. C. Crowley
202.778.9447
dan.crowley@klgates.com
Arthur C. Delibert
202.778.9042
arthur.delibert@klgates.com
Stacy L. Fuller
202.778.9475
stacy.fuller@klgates.com
Susan Gault-Brown
202.778.9083
susan.gaultbrown@klgates.com
Jennifer R. Gonzalez
202.778.9286
jennifer.gonzalez@klgates.com
K. Susan Grafton
202.788.9488
susan.grafton@klgates.com
Robert C. Hacker
202.778.9016
robert.hacker@klgates.com
Kathy Kresch Ingber
202.778.9015
kathy.ingber@klgates.com
Rebecca H. Laird
202.778.9038
rebecca.laird@klgates.com
Cary J. Meer
202.778.9107
cary.meer@klgates.com
Marc Mehrespand
202.778.9191
marc.mehrespand@klgates.com
R. Charles Miller
202.778.9372
chuck.miller@klgates.com
202.778.9371
dean.miller@klgates.com
Dean E. Miller
R. Darrell Mounts
202.778.9298
darrell.mounts@klgates.com
Lawrence B. Patent
202.778.9219
lawrence.patent@klgates.com
C. Dirk Peterson
202.778.9324
dirk.peterson@klgates.com
David Pickle
202.778.9887
david.pickle@klgates.com
202.778.9186
alan.porter@klgates.com
Alan C. Porter
Theodore L. Press
202.778.9025
ted.press@klgates.com
Eric S. Purple
202.778.9220
eric.purple@klgates.com
Francine J. Rosenberger
202.778.9187
francine.rosenberger@klgates.com
Bruce A. Rosenblum
202.778.9239
bruce.rosenblum@klgates.com
202.778.9464
robert.rosenblum@klgates.com
Robert H. Rosenblum
William A. Schmidt
202.778.9373
william.schmidt@klgates.com
Lori L. Schneider
202.778.9305
lori.schneider@klgates.com
Lynn A. Schweinfurth
202.778.9876
lynn.schweinfurth@klgates.com
Donald W. Smith
202.778.9079
donald.smith@klgates.com
202.778.9082
fatima.sulaiman@klgates.com
Fatima S. Sulaiman
Andras P. Teleki
202.778.9477
andras.teleki@klgates.com
Stacy H. Winick
202.778.9252
stacy.winick@klgates.com
Roger S. Wise
202.778.9023
roger.wise@klgates.com
Robert A. Wittie
202.778.9066
robert.wittie@klgates.com
202.778.9059
robert.zutz@klgates.com
Robert J. Zutz
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This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard
to any particular facts or circumstances without first consulting a lawyer.
©2012 K&L Gates LLP. All Rights Reserved.
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K&L Gates includes lawyers practicing out of more than 40 fully integrated offices located in North America, Europe,
Asia, South America, and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100
corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and
public sector entities. For more information about K&L Gates or its locations and registrations, visit www.klgates.com.