READ ONLINE //
If you have questions or comments, please contact Amber Landis, ACG Global vice
president of public policy.
Find updates and
insight on policy
issues on the
The highly publicized SEC settlement with Maryland-based private equity adviser Black-
street Capital Management and its owner is among notable regulatory developments. The
SEC said the firm engaged in brokerage activity and charged fees without registering as a
broker-dealer, among other allegations.
Due to the SEC’s multiple charges it is difficult to determine how much emphasis was
placed on the broker-dealer activity. Nevertheless, the move demonstrates the agency’s
continued interest in unregistered broker-dealer activity, and emphasizes the need for private equity firms to be aware of the issue when they take securities-related transaction fees
in connection with the purchase or sale of securities. ACG has held several calls with PERT
members and is working with the SEC’s Division of Trading & Markets to gain additional clarity for ACG members and midsize PE firms.
Lastly, on June 28, the SEC proposed a new rule that would require investment advisers to adopt and implement written business continuity and transition plans. Currently, the
SEC staff only expects advisers to address business continuity in their written policies and
procedures to the extent relevant. The proposed rule, if adopted, would create a standalone
requirement for such plans.
In the event of technological failures, cyberattacks, natural disasters, and the absence of
key individuals or a substantial number of employees, “advanced planning and preparation
can help mitigate the effects of such disruption, and in some cases, minimize the likelihood of
their occurrence, which is an objective of [the proposed] rule,” said SEC Chair Mary Jo White.
The proposed rule would require an adviser’s plan to be based upon the particular risks
associated with the adviser’s operations and include policies and procedures addressing
items such as:
• Maintenance of systems and protection of data;
• Pre-arranged alternative physical locations;
• Communication plans;
• Review of third-party service providers; and
• Plan of transition in the event the adviser is winding down or is unable to continue
providing advisory services.
Comments to the proposed rule are due by Sept. 6, 2016. //