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Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds
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Dodd-Frank Update: Legal & Tech Requirements for Hedge Funds

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Learn about the Dodd-Frank Wall Street Reform and Consumer Protection Act and it's implications on hedge funds and private equity firms, including registration requirements and technology best …

Learn about the Dodd-Frank Wall Street Reform and Consumer Protection Act and it's implications on hedge funds and private equity firms, including registration requirements and technology best practice guidelines.

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  • Introduce Eze Castle Integration... Founded in 1995 Offices across the world, including 8 offices in the U.S. and locations in London, Geneva and Singapore Over 550 hedge fund clients, managing $300B+ of assets Services and solutions to meet the needs of hedge funds and alternative investment firms, everything from PCs and critical infrastructure to backup and storage solutions, to business consulting and project management
  • There are two major activities for compliance Defining what you have to do as part of your compliance program (Advisory)Monitoring what you have to do (Controls)You define what you have to do with some or all of the inputs
  • Transcript

    • 1. Dodd-Frank Update: Legal & Technology Requirements for Firms
    • 2. Agenda
      Dodd-Frank & Investment Adviser Registration
      Technology as Part of an Adviser’s Compliance Program
      Technology Best Practice Guidelines
    • 3. Dodd-Frank and Investment Adviser Registration
    • 4. Investment Advisers - General
      An investment adviser is any person who engages in the business of advising others or providing analyses or reports concerning securities for compensation.
      Includes hedge fund and private equity fund managers
      Affirmative duty of utmost good faith, and full and fair disclosure of all material facts
      The Investment Advisers Act of 1940 requires “investment advisers” to register with the SEC unless a specific exemption is available.
      End of private adviser exemption under Dodd-Frank
    • 5. Who Must Register
      Advisers solely to Private Funds (e.g., hedge funds and private equity funds) must register with SEC if AUM are $150 million or more.
      Advisers to Private Funds and other accounts must register with the SEC if AUM are $100 million or more.
      Advisers to Private Funds and other accounts must register with state if AUM is between $25 million to $100 million. However, will instead be required to register with the SEC if:
      • Adviser is not required to register with the state securities regulator as an investment adviser, or
      • 6. Adviser is required to register with the state securities regulator, but the Adviser is not subject to examination as an investment adviser by the state.
      Advisers to RICs and BDCs
      Adviser holds itself out to the public in the U.S. as an investment adviser
    • 7. New Exemptions
      Less than $150 million
      Venture capital funds
      Registered CTA
      Foreign private adviser
      Intrastate adviser, no funds
      Small business investment companies
      New category of “exempt reporting adviser”
    • 8. State Issues
      Individual state registration requirements
      Notice filings
      Investment Adviser representatives
    • 9. Registering with the SEC
      Compliance Infrastructure
      Chief Compliance Officer
      Policies and Procedures
      Prepare Form ADV
      Part 1
      Part 2
      Register
      IARD Entitlement and Filing Fees
      Filing Form ADV
      Going Effective
    • 10. Selected Compliance Issues
      SEC Examinations
      Compliance Policies and Procedures
      Emphasis on procedures and training
      Committees
      (risk, valuation, brokerage, compliance)
      Trading practices
      (trade allocation, trade errors, best execution, soft dollars)
      Insider Trading
      Pay-to-Play
      Books and Records
      Code of Ethics
    • 11. Code of Ethics
      Required:
      Annual holdings report
      Quarterly transaction reports
      Pre-approval for IPOs and limited offerings
      Insider trading policies
      Best Practices (not required)
      Pre-approval of most securities transactions
      Provision of duplicate brokerage statements
      Restrictions on gifts and entertainment
      Restrictions on outside activities and boards
      Access Person v. Supervised Person
    • 12. Circular 230 Disclosure: Internal Revenue Service regulations provide that, for the purpose of avoiding certain penalties under the Internal Revenue Code, taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations, including a requirement that such opinions contain extensive factual and legal discussion and analysis. Any tax advice that may be contained herein does not constitute an opinion that meets the requirements of the regulations. Any such tax advice therefore cannot be used, and was not intended or written to be used, for the purpose of avoiding any federal tax penalties that the Internal Revenue Service may attempt to impose.
      Boston
      Frankfurt
      Hartford
      Hong Kong
      London
      Los Angeles
      New York
      Orange County
      San Francisco
      Santa Monica
      Silicon Valley
      Tokyo
      Washington
      bingham.com
      © 2010 Bingham McCutchen LLP One Federal Street, Boston, MA 02110-1726 ATTORNEY ADVERTISING
      To communicate with us regarding protection of your personal information or to subscribe or unsubscribe to some or all of Bingham McCutchen LLP’s electronic and mail communications, notify our privacy administrator at privacyUS@bingham.com or privacyUK@bingham.com (privacy policy available at www.bingham.com/privacy.aspx). We can be reached by mail (ATT: Privacy Administrator) in the US at One Federal Street, Boston, MA 02110-1726 or at 41 Lothbury, London EC2R 7HF, UK, or at 866.749.3064 (US) or +08 (08) 234.4626 (international).
      Bingham McCutchen (London) LLP, a Massachusetts limited liability partnership regulated by the Solicitors Regulation Authority (registered number: 00328388), is the legal entity which operates in the UK as Bingham. A list of the names of its partners and their qualifications is open for inspection at the address above. All partners of Bingham McCutchen (London) LLP are either solicitors or registered foreign lawyers.
      Bingham McCutchen LLP, a Massachusetts limited liability partnership, is the legal entity which operates in Hong Kong as Bingham McCutchen LLP. A list of the names of its partners practicing in the Hong Kong office and their qualifications is open for inspection at the address above. Bingham McCutchen LLP is registered with the Hong Kong Law Society as a Foreign Law Firm and does not practice Hong Kong law. Bingham McCutchen LLP operates in Hong Kong in formal association with Roome Puhar, a Hong Kong partnership which does advise on Hong Kong law.
      This communication is being circulated to Bingham McCutchen LLP’s clients and friends. It is not intended to provide legal advice addressed to a particular situation. Prior results do not guarantee a similar outcome.
    • 13. Technology in an Investment Adviser’s and Broker/Dealer’s Compliance Program
    • 14. Two High Level Constituents in Compliance Management
      Elements in Compliance Program Operations
      Technology Components in a Compliance Program
      Benefits of Automated Systems
      Agenda
    • 15. Two Major Constituents in Compliance Programs
      Constituent 1: “Advisory” Deciding What Firm Needs To Do(Many Inputs!)
      Regulator’s Rules
      Legislation
      Expected Practices
      External Advisory (legal or compliance consultants)
      Regulators’ Reporting Requirements
      Regulators’
      “Show Me”
      Expectations
      Firm’s Culture
      Firm’s Products
      Risk Assessments
      Defines
      Firm’s Compliance Program (Policies and Procedures)
      Constituent 2: “Control”: Doing What Firm Said it was Going to Do
      Manual processes or technology tools to ensure policies and procedures are followed
    • 16. Elements in Compliance Program Operations
      New Client Qualification (including AML)
      Personal Trade Monitoring
      Other Code of Ethics and Conflict of Interest Management
      Calendar and Activity Management
      Document Management
      Case Management
      Email/Social Media Retention and Surveillance
      Trade and Fund Surveillance
      Books and Records
      Business Continuity Planning
    • 17. Technology Components in a Compliance Program
      Key Activities in Compliance Program
      Document Management incl. Policies & Procedures
      New Client
      Qualification
      Personal Trading
      Pre-Clearance, Rules, Employee Trades
      Compliance Program Management
      Case/Issue Tracking
      Client Complaints, Trade Errors, etc.
      Compliance
      Calendar
      Procedures, Filings, Reviews, Controls, Tests, Due Diligence, Attestations, Certifications
      Document & Report Review
      Marketing, Trade Reports, etc.
      Custom Forms, Questionnaires
      & Checklists
      Conflicts of Interest
      Disclosures & Review Gifts, Outside Activities, Political Contributions, etc.
      Surveillance
      Trading, Positions, Email, Social Media
      Key Underlying Technology Components
      CRM
      Books & Records
      Trading and Accounting
      Business Continuity Planning
      Data Storage & Retention
    • 18. Benefits of Automated Systems
      After…
      Compliance Program Before…
      Organize
      So You Can
      Analyze
      Provides
      Benefits:
      Reduces Costs
      Reduces Risk
      Saves Management Time
      Attracts Assets
    • 19. Technology in an Investment Adviser’s and Broker/Dealer’s Compliance Program
    • 20. Technology Best Practice Guidelines
    • 21. Dodd-Frank Technology Implications
      Specific technology system safeguards not defined
      Other portions of Act are more specific
      Imply best practices
      Investor requirements dictating expectations
    • 22. Dodd-Frank Guidelines for Others
      Record Keeping
      Each organization shall maintain records of all activities related to the business of the facility, including a complete audit trail —
      (i) in a form and manner that is acceptable to the Commission; and
      (ii) for a period of not less than 5 years.
    • 23. Technology Focus Areas
    • 24. Disaster Recovery vs. Business Continuity
    • 25. Five Steps to Business Continuity Planning
      BCP Life Cycle
    • 26. Disaster Recovery Blueprint
      Recovery Point Objective (RPO)
      The point in time to which you must recover data as defined by your organization
      Recovery Time Objective (RTO)
      The duration of time within which a business process must be restored after a disaster
    • 27. Other Disaster Recovery Considerations
      In-house vs. outsourced
      Traditional vs. managed service
      Redundancy of DR infrastructure
      Data Center security
      Managed by Business Continuity Professionals
      24x7x365 support and monitoring
      Frequency of testing
    • 28. Data Retention & Archiving Blueprint
      SEC advises advisers to retain all internal and external email and IM business communications
      Tape backup is not adequate!
      Sound practices for Archiving include:
      Retaining email and IMs for prescribed amount of time by law
      Storing data in WORM format
      Searchable indexing of files
      Keeping archived data on your own server and make sure it is easily available
    • 29. Considerations for Archiving
    • 30. Eze Castle Integration Overview
    • 31. 260 Franklin Street, 12th floor Boston, MA 02110 617-217-3000 www.eci.com

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