Fund Updates

Regulations

The latest regulatory changes, updates, and decisions impacting the alternative investment sector.

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Digital Assets: BoE Official Likens Crypto To Subprime, Warns Of 2008-Like Crash

October 15, 2021

In a speech on Wednesday, Jon Cunliffe of the Bank of England called for tough regulations on cryptocurrencies, drawing a parallel between the $1.2 trillion subprime mortgage market in 2008 and the growth of the crypto market from a mere $16 billion five years ago to its $2.3 trillion capitalization today.

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More Stories on Regulations

Digital Assets: Hong Kong’s SFC Greenlights Arrano’s Bitcoin-tracking Fund

April 29, 2020

Founded in 2019, Arrano Capital is the blockchain arm of Venture Smart Asia Limited. On April 20, Venture Smart Asia got the approval from the Hong Kong Securities and Futures Commission to launch the territory’s first regulated virtual-assets fund. The approval let Arrano Capital set up its bitcoin tracking fund, one that could invest 100% in virtual assets.

Liquid Alternatives: What the Proposed New Regulations on Leveraged ETFs Mean for Investors

March 12, 2020

The SEC’s proposed regulations have triggered widespread opposition, particularly those relating to leveraged (geared) ETFs.
The public has until March 24, 2020, to submit its comments on the proposals.

Digital Assets: Blockchain Securities May See New Dawn in 2020

February 14, 2020

Regulatory progress may lay the base for a revival of blockchain-based securities such as tokens and ICOs. According to Aaron Kaplan, the SEC’s strategy to crack down on digital assets and apply the rigor of traditional securities’ regulation to blockchain securities is a welcome move.
He likened it to the days of old when the criminal excesses of “bucket shops” yielded to regulation through securities law.

Digital Assets: German Banks Line Up for Licenses to Offer Crypto-Custody Services

February 13, 2020

About 40 banks have applied to Germany’s Federal Financial Supervisory Authority, or BaFin, for licenses to operate custody services for digital assets. (Coingeek)
Bafin last month released new guidelines that will impact firms offering or intending to offer custody services for digital assets such as cryptocurrencies and tokens. Effective January 1, 2020, depository or custody services for crypto assets stand classified as a financial service under the German Banking Act.

FinTech: Australian Legislators Pass Law to Enhance ASIC’s Fintech Regulatory Sandbox

February 12, 2020

Australian Legislators Pass Law to Enhance ASIC’s Fintech Regulatory Sandbox. The amendments passed on Monday extend the scope and timeframe fintechs can spend on the existing ‘sandbox.’ The ‘Treasury Laws Amendment (2018 Measures No. 2) Bill 2019‘ allows more businesses such as fintechs to test a wider range of new financial and credit products and services without a licence from ASIC for up to 24 months.

Digital Assets: In Reforms Push, China Mulling Rules for New Digital Banks, Including by Foreigners

January 17, 2020

China is working on guidelines for the establishment of online-only banks.
Chinese regulators are pushing for the establishment of new, 100% digital banks to reduce risk in the country’s financial sector. They also want to broaden Chinese banking by allowing participation from new players including foreigners.

Hedge Fund Citadel Distances Itself from Ex-Employee over Illegal Trading

January 13, 2020

Hedge fund Citadel issued a statement last week that distanced itself from a former trader who profited from non-public information. Michael Mindlin worked for Citadel between June 2016 and June 2018. However, U.S. regulators just fined him for illegally profiting from tips tied to the Affordable Healthcare Act in 2014. At the time, Mindlin worked for Stelliam Investment Management.

ESG: The SEC’s Scrutiny of ESG Investing Could Be a Blessing, Say Advisers

January 7, 2020

According to the Wall Street Journal, regulators are questioning the methodologies and criteria for the selection of companies by funds that tout ESG portfolios. ESG is an acronym for environmental-social-and governance observances. ESG investing is also known as impact, or socially responsible investing.
The SEC’s move may not be such a bad thing according to advisers, says InvestmentNews.

Alternative Investments: SEC to Redefine The Term “Accredited Investor”

December 20, 2019

The SEC is proposing to amend the rules that define the term “accredited investor,” a class of investors allowed to invest in private market investments such as hedge funds and startups. The threshold to qualify as an accredited investor is currently $1 million.

Digital Assets: Jay Clayton – SEC Hastens Slowly on Digital Assets

December 12, 2019

Jay Clayton said in testimony to the Senate that the SEC was taking a measured approach to regulation of digital assets.
Jay Clayton was very positive on the prospects of distributed ledger technology, or the blockchain, in his testimony to the Senate. He also stated that the SEC was a “measured approach” to regulation of digital assets.

Digital Assets: The SEC Thaws; Approves Bitcoin Futures Fund

December 10, 2019

In what Commissioner Hester Peircetook hailed as “a bit of progress,” the SEC cleared the decks for the launch of a bitcoin futures fund.
The SEC last week approved the launch of the futures-based NYDIG Bitcoin Strategy Fund. The regulator cleared the Form N-2 filed by Stone Ridge Trust VI on October 2 with amendments on October 16 and November 26.

Opportunity Zones and Ron Wyden

Sen. Ron Wyden Demands Study on Opportunity Zone Management

November 6, 2019

Opportunity Zones have become topics of interest among institutional investors. The passage of the 2017 Tax Cuts and Jobs Act pushed through opportunity zones as potential long-term investments.

NBER: Beware Bond Mutual Funds and Their Reported Holdings

November 5, 2019

The National Bureau of Economic Research issued a stark warning about bond mutual funds and risk. In a new report, NBER says that at least 30% of bond mutual funds hold riskier assets than what Morningstar reports. The agency released this warning in a report titled “Don’t Take Their Word For It: The Misclassification of Bond Mutual Funds.”

Elizabeth Warren and Hedge Funds

Elizabeth Warren: Everything is Wrong with Private Equity, Everything

October 6, 2019

The “Elizabeth Warren War on Private Equity” hit a new stride after the Democratic candidate took aim at PE firms that own or back for-profit colleges. Recently, Senator Warren (D-Mass) and Representative Mark Pocan (D-Wisc.) co-signed a 30-page letter to six private equity firms about investment in these colleges. The Democrats asked several questions about the schools’ marketing, tuition costs, federal aid practices, profits, graduation rates, and related legal actions.

Liquid Alternatives

SEC Extends EGC Rule, Modernizes ETF Rules

September 26, 2019

The SEC announced Wednesday it had adopted new rules that extend the “test-the-waters” accommodation.

Australian Watchdog Orders Audit of Paypal for Lapses in Money Transfers

September 25, 2019

Austrac suspects that Paypal had not met reporting obligations regarding anti-money laundering and counter-terrorism financing laws. An external auditor will conduct Austrac’s audit of Paypal and report to Austrac within 120 days. However, Paypal will pay for the audit.

Independent Community Bankers of America Want the SAFE Act Passed

September 19, 2019

Community Banks Back Cannabis Financial Services Bill The Independent Community Bankers of America sent a letter to the leadership of the House and the Senate urging them to pass the SAFE banking bill. The bill would allow for cannabis companies to use banks and banking services. The letter noted that “The SAFE Banking Act would…

Private Equity in the Dock for Alleged “Surprise Billing Practices”

September 19, 2019

A bipartisan Congressional investigation is to determine whether private equity giants are behind price gouging in emergency care.
“Surprise billing practices” are unexpectedly large medical bills from an out-of-insurer-network physician for emergency treatment. These bills could also emanate from an out-of-network physician or ancillary clinician working in an in-network hospital.

SEC Charges Jay Daniel Seinfeld and Social Worker on Fraud Scheme

September 17, 2019

SEC Issues Investor Warning after Seinfeld Defrauds Terminally Ill Jay Daniel Seinfeld used a fake charity to defraud terminally ill patients out of their money. Let that one sink in for a minute. The SEC has settled charges with Seinfeld, his firm Traditions Capital Management and his fake charity, the Hospice Patient Aid Program. The…

Department of Justice Slaps Three Traders with RICO Charges

September 17, 2019

JPMorgan – AKA Bank A – Traders Charged with Market Manipulation The Department of Justice just made JPMorgan’s public relations team buy a lot of headache medication. Two JPMorgan precious metals traders and one former trader face charges for their alleged participation in a racketeering conspiracy. They also face charges of other federal crimes in…

Liquid Alternatives

SEC Hits Stifel and BMO Capital with Big Fines

September 16, 2019

Firms provided incomplete or inaccurate data to the agency Stifel Nicolaus will pay $2.7 million, while BMO Capital Markets will pay $1.95 million to settle charges with the SEC. The firms provided incomplete and inaccurate securities trading information to the SEC. The agency said Monday that broker-dealers must provide information known as “blue sheet data”…

Regtech

RegTech Revenues Climb in Step with Startup Activity, Says CCAF Benchmarking Report

September 12, 2019

RegTech revenues in 2018 top $5 billion following a sharp pickup in startup activity
The above statistic is a finding of the “Global RegTech Benchmarking Report,” published by The Cambridge Centre for Alternative Finance (CCAF) and sponsored by EY Japan.

SEC Charges Herbert Hafen With Financial Fraud

September 5, 2019

Hafen was previously barred by FINRA in early 2019 Herbert Hafen is having a tougher day than you are. The Securities and Exchange Commission has charged Herbert Hafen with defrauding multiple retail clients. From 2011 to 2018, Hafen allegedly misappropriated about $1.6 million of client assets. The U.S. Attorney’s Office for the Southern District of…

ESMA Hikes Frequency of Liquidity Stress Tests on European funds

September 3, 2019

European funds such as UCITs, AIFs, and ETFs must conduct quarterly liquidity stress tests, according to the European Securities and Markets Authority (ESMA)
The funds must implement these tests from September 2020.