Securities

Subscribe to Securities

The SEC announced on March 13, 2020 that investment advisers affected by Coronavirus are exempted from filing an amendment to Form ADV Part 1A and the Brochure (ADV Part 2A) for up to 45 days.  https://www.sec.gov/rules/other/2020/ia-5463.pdf.  The annual amendments for ADV are due March 30, 2020 for most firms.  In addition, the SEC exempted advisers affected by Coronavirus from the requirements to deliver amended brochures, brochure supplements or summary of material changes to clients where the disclosures are not able to be timely delivered because of circumstances related to Coronavirus.

Continue Reading SEC Gives Advisers COVID-19 Regulatory Relief

ADV Amendments

The annual amendment for ADV Parts 1A (and 1B for state-registered advisers) and the Brochure (ADV Part 2A) is due March 30, 2020 (for firms with year-end fiscal years).  These must be filed with the SEC and with the State of Louisiana (or other state[s] of registration) through the IARD.  There is no annual amendment required for the Brochure Supplement (Part 2B).  However, you should amend the Brochure Supplement, as well as the other ADV Sections, when it becomes materially inaccurate (some items in the ADV, such as changes in assets under management, do not require interim amendments).

If there is a material change to your Brochure (ADV Part 2A) from the last annual update, you are required to deliver the updated brochure to your clients within 120 days of the end of your fiscal year-end.  You are also required to promptly deliver to your clients an updated Brochure Supplement if there is updated disciplinary information.Continue Reading 2020 Louisiana Investment Adviser Update

Top 10 Louisiana Advisers

For this edition, I thought that we would look at the top ten SEC registered investment advisers within the State of Louisiana.  The SEC publishes a comprehensive database that captures all information submitted by advisers in their Form ADV’s.  There is a total of 55 advisers registered with the SEC in Louisiana.  Using this data, we came up with a list of the top Louisiana registered investment advisers by assets under management (“AUM”) and by number of accounts.  For purposes of these rankings, we excluded advisers that are:  (i) headquartered out of state, (ii) did not provide advisory services to the public, or (iii) umbrella organizations for groups of unaffiliated advisers.  For the ranking of advisers by number of accounts, we included a column showing the percentage of accounts that are held by individuals, who are not high net worth individuals (net worth >$2.1 million).

There is a lot of data that we did not publish.  Let us know if there is a data summary that you would like to see.Continue Reading Louisiana Investment Adviser Update • Top 10 Advisers in Louisiana • SEC Issues New Proxy Guidance for Advisers

The June 5 Releases

Today we focus on the new SEC interpretative release on the fiduciary duties of investment advisers and provide a brief summary of its contents (“The Fiduciary Duty Release”).[1]  This Release is part of a package of new rules and interpretations adopted by the SEC on June 5, 2019.  In total, there are four new rules and interpretations:

  1. Regulation Best Interest (“BI”);
  2. Form CRS, a new form for advisers and brokers;
  3. the Fiduciary Duty Release; and
  4. the Release on the “solely incidental” investment adviser exclusion.[2]

Together these four Releases total a mammoth 1336 pages and define and differentiate the duties owed by brokers and investment advisers.Continue Reading Latest Guidance on Fiduciary Duties

Fingerprints

Effective January 1, 2019, Louisiana Senate Bill 416 requires all investment adviser representative (“IAR”) applicants to submit fingerprints for a criminal background check to the Louisiana Commissioner of Securities.  La. R.S. 51:703(D)(5).  Investment adviser representatives registered before January 1, 2019 (unless they change advisers) and IAR’s already registered with FINRA do not need to submit fingerprints.  Fingerprint cards can be obtained from local law enforcement offices and submitted along with a completed Louisiana State Police Bureau of Criminal Identification and Information Form, and a completed and notarized Authority to Obtain Information from Outside Sources form.  The forms are available from the Commissioner of Securities office.

US Government Shutdown

Although the US government, and the SEC, is shutdown, advisers should continue to meet all statutory and regulatory deadlines as set forth in the SEC’s Operations Plan Under Government Shutdown (Dec. 2018).  The IARD is still operating and accepting filings, although the SEC will not approve new or pending adviser registration applications.

ADV Amendments

Advisers must file their annual Form ADV Amendment by March 31, 2019.  You should make sure that your IARD account is funded and password is current in advance of the deadline.  There were no significant amendments to Form ADV this year (the SEC made a number of amendments in 2018 relating to separately managed accounts and standing letters of authority).
Continue Reading 2019 Louisiana Investment Adviser Update

For many investment advisers, CPAs are a big source of referrals. Often these CPAs are compensated for the referrals. Most states now require registration of solicitors, including CPAs, as investment adviser representatives (“IAR”). This article provides some background on these requirements.

1.  A Little Refresher

What is a solicitor? A solicitor is a person who, directly or indirectly, solicits or refers clients to an adviser. A solicitor relationship arises when an adviser pays an employee or third party for referring clients. The use of solicitors is regulated by the SEC under the Investment Advisers Act of 1940 and by the various states.
Continue Reading Some Thoughts on Registration of CPA’s as Solicitors

The Louisiana Supreme Court’s reversal of Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc., hands a victory to financiers of oil and gas operations and settles a long-running controversy over the amount of damages available for failure to pay mineral royalties.

The Gloria’s Ranch trial court held two mineral lessees and a mortgagee (Wells Fargo) solidarily liable for more than $20 million in damages resulting from failure to release a mineral lease in North Louisiana.  The Second Circuit affirmed the finding of solidarity on the basis that Wells Fargo became an owner of the mineral lease because it “controlled the bundle of rights that make up ownership, i.e., the rights to use, enjoy, and dispose of the lease.” However, a vigorous dissent warned that the majority’s “control theory” to impose solidarity between a mortgagee and a mineral lessee could have “[d]evastating economic repercussions” for the lending industry, and “[s]erious and harmful impact on the oil and gas industry.”Continue Reading Louisiana Supreme Court’s reversal of Gloria’s Ranch clarifies calculation of damages for unpaid mineral royalties, provides relief for holders of security interests in mineral rights

The United States Fifth Circuit Court of Appeal vacated the entire DOL Fiduciary rule in a split decision on March 15, 2018, U.S. Chamber of Commerce v. DOL, No. 17-10238 (5th Cir. 3/15/2018).  Two other circuits have upheld the DOL rule (the Tenth and the District of Columbia Circuits).  This ruling will not become immediately applicable as it is subject to rehearing and appeal to the Supreme Court.  Accordingly, advisers should continue to follow applicable DOL fiduciary rule policies and procedures.  It may be several months before whether we know the impact of this decision.
Continue Reading Fifth Circuit Throws Out DOL Fiduciary Rule

The Department of Labor officially announced the 18-month extension of the effective date of the key, and most onerous provisions, of the DOL Fiduciary Rule (until July 1, 2019).[1]  The announcement was made on November 29, 2017.  This extension delays the implementation of the most problematic procedures of the DOL Fiduciary Rule, which had been previously set to take effect on January 1, 2018.  However, advisers should be aware that the portions of the DOL Fiduciary Rule, known as the “Impartial Conduct Standards,” are already effective.
Continue Reading Extension of DOL Fiduciary Rule is Official and some Guidelines for Documenting Rollovers

The SEC published new guidance on RIA advertising yesterday in a National Exam Program Risk Alert dated September 14, 2017 (https://www.sec.gov/ocie/Article/risk-alert-advertising.pdf).  The Risk Alert is entitled “The Most Frequent Advertising Rule Compliance Issues Identified in OCIE Examinations of Investment Advisers.”  This is particularly important because the SEC is focusing on marketing materials in its latest exam cycle.  In the Risk Alert, the SEC highlights common errors made by advisers in their marketing and advertising materials.
Continue Reading SEC Publishes New Guidance on Investment Adviser Advertising