Upcoming SEC Certification Requirements for Officers/Directors of Private Funds and New Quarterly Deadlines for CTAs for Form PR

September 13, 2013

In July of 2013, the U.S. Securities and Exchange Commission (“SEC”) adopted a “bad actor” provision to be added to Rule 506 of Regulation D. These amendments are aimed at disqualifying securities offerings involving certain “felons and other bad actors”. The change potentially affects all hedge fund directors and/or any “Covered Person,” as each such person is advised to make a certification of compliance to the SEC. Covered Persons include, among others, directors, executive officers (of funds or fund management companies), beneficial owners of 20 percent or more of an issuer’s voting securities, promoters and investment managers. Non-compliance may have an impact on the ability of funds to attract new investments and, in some cases, may trigger enforcement actions by the SEC. Covered Persons are expected to be in compliance with the new rule by September 23, 2013.

All hedge fund directors are encouraged to certify that they are not disqualified because of:

  1. Criminal convictions (felony or misdemeanor in connection with sale or purchase of a security);

  2. Court injunctions and restraining orders;

  3. Final orders (as defined in Rule 501(g)) of certain state regulators (such as securities, banking, and insurance) and federal regulators, including the U.S. Commodity Futures Trading Commission (the “CFTC”);

  4. Commission disciplinary orders relating to brokers, dealers, municipal securities dealers, investment advisers, and investment companies and their associated persons;

  5. Certain SEC cease and desist orders;

  6. Suspension or expulsion from membership in, or suspension or barring from association with a member of, a securities self-regulatory organization (“SRO”);

  7. Commission stop orders and orders suspending a Regulation A exemption; and

  8. U.S. Postal Service false representation orders.

If you have any questions about these amendments, you should contact Crow & Cushing so that we may assist in helping you come into compliance with the new rule by making the appropriate certifications. Please contact us with any questions that you may have.

 

For more information on the new Regulation D amendments, please visit: http://www.sec.gov.

 

With respect to all registered commodity trading advisors (“CTAs”), the National Futures Association (“NFA”) requires all CTAs to submit a Form PR each quarter. The Commodity Futures Trading Commission (“CFTC”) adopted these rules on March 30, 2013. The first filing for NFA Member CTAs will be for the quarter ending September 30, 2013 and will be due on November 14, 2013.

 

Please note that NFA’s quarterly Form PR consists of the CFTC Annual Form PR along with some additional questions relating to certain trading programs being offered by the CTA, and the related monthly rates of return and the assets under management for those trading programs.

 

You may view the new Form PR here: http://www.nfa.futures.org/NFA-electronic-filings/CTA_PR_Template_for_Members.pdf

 

 

 

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