The Hedge Fund Law Report

The definitive source of actionable intelligence on hedge fund law and regulation

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By Topic: Regulation FD

  • From Vol. 10 No.12 (Mar. 23, 2017)

    Best Practices for Investment Advisers Using Social Media to Mitigate Advertising Rule Violations and Other Risks

    The advent of Twitter, Facebook, LinkedIn and other widely popular social media forums has had a dramatic impact on society at large, including the investment funds industry. Yet investment advisers and firms may not fully grasp the compliance and operational risks that new technologies and sites can pose. Questions abound as to whether social media can be used to provide material information to certain investors at the expense of others; when the line is crossed from informational content to marketing a fund; and whether the social media accounts of individual employees and representatives need to be monitored for compliance purposes. These issues were the subject of a recent Regulatory Compliance Association (RCA) PracticEdge session that offered insights from Heather Traeger, chief compliance officer for the Teacher Retirement System of Texas; Parisa Haghshenas, a Branch Chief in the Chief Counsel’s Office of the SEC’s Division of Investment Management; Catherine Courtney Gordon, counsel at Morgan Lewis; and Isabelle Sajous, associate general counsel and deputy chief compliance officer at Cramer Rosenthal McGlynn. This article highlights the key takeaways from the session. For coverage of other RCA panels, see “Risks With Investment Allocation, Trade Execution, Soft Dollars, Client Solicitation and Valuation” (Apr. 14, 2016); and “Issues Pertaining to the Custody Rule, ERISA, Client Agreements, Fees, Codes of Ethics and Confidentiality” (Apr. 7, 2016). On May 18, 2017, RCA will host its annual Enforcement, Compliance & Operations Symposium in New York City. For additional information or to register for the symposium, click here.

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  • From Vol. 3 No.43 (Nov. 5, 2010)

    Office Depot Settles SEC Charges that It Violated Regulation FD by Indirectly Signaling Its Quarterly Estimates Privately to Analysts and Institutional Investors

    On October 21, 2010, the U.S. Securities and Exchange Commission (SEC) filed a Complaint in the Southern District of New York and simultaneously settled enforcement actions against Office Depot, Inc., its CEO, Stephen A. Odland, and its former CFO, Patricia A. McKay (collectively, the Defendants).  The SEC charged the Defendants with violating Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act), and SEC Regulation FD, in 2007, for selectively communicating to analysts and institutional investors that Office Depot would not meet the analysts’ quarterly earnings estimates.  The settlement is noteworthy because Office Depot did not directly inform analysts that it would not meet expectations, a classic Regulation FD violation, but signaled that fact through references to recent public statements of comparable companies and its prior cautionary public statements.  This matter is of particular importance to the hedge fund community because it highlights the risks involved when hedge fund managers, analysts and traders gather information from corporate insiders in small group meetings or other private settings.  For more on situations in which hedge fund managers speak to corporate management, see “How Can Hedge Fund Managers Distinguish Between Market Color and Inside Information,” The Hedge Fund Law Report, Vol. 2, No. 46 (Nov. 19, 2009).  This article discusses the legal principles underlying Regulation FD, the background of the action and the settlement.

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