MyComplianceOffice & Milne Legal Webinar: SEC Compliance Program for European Investment Advisors 13 th September 2016
“We believe that great governance is at the heart of great business, helping to protect and promote your reputation”. Brian Fahey, CEO, TerraNua advance@mycomplianceoffice.com
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����� ������ is a boutique law firm, organized in Europe to provide US Tax, US Investment Advisory and US Tax Preparation services to any person or entity that has a personal connection with or business interest in the United States. With two ML offices in the very heart of Europe, ML is in a unique position to apply the US tax and regulatory laws in a way that is thoughtful, creative, and tailored directly to the needs of our European clientele . ������������������ Milne Legal GmbH offers the information disclosed in this webinar and these slides for general information purposes only. Under no circumstances should you rely on or use the information provided on these slides as a substitute for legal advice. Neither this webinar nor these slides are a solicitation or an offer to represent you and is not intended to create and does not create a lawyer(client relationship with Milne Legal. Milne Legal advises you to seek legal representation prior to taking any action on the information disclosed herein. ������
Today's Agenda 1. Definitions: Investment Adviser, U.S. Jurisdictional Means, and U.S. Person. 2. Compliance Program: Required Books and Records. 3. Preparing for an SEC examination and relevant SEC enforcement actions. ������
Polling Question 1: My adviser is 1) an investment advisory firm organized outside the U.S. which is not registered with the SEC (e.g., relying on an exemption from registration); 2) an investment advisory firm organized outside the U.S. which is registered with the SEC, or 3) an investment advisory firm organized in the U.S., or 4) I represent a client who manages U.S. clients assets. ������
�� ������������ ���������� ������� !�"� #������������� ����� ��� !�"� ������� An ���������� ������� is defined as: Any person who, for ������������ , engages �� ��� �������� of �������� others, either directly or through publications or writings, as to the value of ���������� or as to the advisability of investing in, purchasing, or selling ���������� , or who, for compensation and as part of a ������� �������� , issues or promulgates analyses or reports concerning securities. ��� ������� ���������� �� ��� ���������� �������� ��� �� ����� Each Element of the definition (all broadly defined): ��� �� ��� ��������� ���� �� �������� ������� ����� ���������� ����������� ��� ���� ��� ��!��������� ������
�� ������������ ���������� ������� !�"� #������������� ����� ��� !�"� ������� �������������� "���#$������������� %����& �����$
�� ������������ ���������� ������� !�"� #������������� ����� ��� !�"� ������� U.S. Jurisdictional Means � Section 203(a) of the U.S. Investment Advisers Act of 1940 prohibits an investment adviser from making use of ��� ����� �� ��' ����� �� ��������������' �� ���������� �������� (“jurisdictional means”) in connection with its business as an investment adviser unless the adviser is registered with the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) under the Advisers Act or qualifies for an exemption from registration. *Website viewable from “inside” the United States? **Suggestion: At a minimum add a disclaimer on the homepage stating that the content and information provided on this website is not intended for U.S. Persons nor is it intended as an offer or solicitation of an offer to provide advisory or broker( dealer services to any person or entity inside the United States. �����%
�� ������������ ���������� ������� !�"� #������������� ����� ��� !�"� ������� Regulatory Definition of U.S. Person Tax Definition of U.S. Person "U.S. Person" is defined as: " U.S. Person" is defined as: � Any natural person �������� in the United States; � Any partnership or corporation organized or incorporated under the laws of the "�����#������ ; � A ����)�� or �������� of the United States, � Any estate of which any executor or administrator is a "���#!����� ; � Any trust of which any trustee is a "���#!����� ; � A partnership created or organized in the � Any agency or branch of a foreign entity ������� ��#��� "�����# United States or under the law of the United ������ ; States or of any State, � Any non(discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or � A corporation created or organized in the account of a "���#!����� ; United States or under the law of the United � Any discretionary account or similar account (other than an estate States or of any State, or or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) ��������#��#��� "�����#������ ; and � Any partnership or corporation if: � Any estate or trust other than a foreign estate or foreign trust (see also, ����#*��� and A. Organized or incorporated under the laws of any foreign ������ *��� ). jurisdiction; and B. (����� �' �#"���#!����� principally for the purpose of investing in ����!����������������"����������� ##�$ securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501 (a)) who are not natural persons, estates or trusts. ������������������ ���� ����� �����&'
�� ������������ ���������� ������� !�"� #������������� ����� ��� !�"� ������� (!�"� ������) ���������� ����� �*� ���������� �������� ��� �� &%�'� The Advisers Act does ��� define “U.S. person” and the SEC has not formally adopted any such definition under the Advisers Act. +��� ,'�-�./&� In 2011, to enforce the provisions under the Dodd(Frank Act (2010), the SEC adopted two new rules, Rule 203(m)(1(d)(8) and 202(a)(30)(1(c)(3), both of which define “U.S. Person” by general reference to +��������� � (making a special exception for discretionary accounts). “U.S. Person” is also defined in ��� ,������' �� (��� �-. and in ��� ,������' �� (��� /( both by referencing Rule 203(m)(1 (adopted in June 2011). 0������ When Adopting Rule 203(m)(1, the SEC stated: “We are adding a note to rule 203(m)(1 that clarifies that a client will not be considered a United States person if the client was not a United States person �� ��� ���� �� �������� � ������ �� ��� ������� . This will permit a non(U.S. adviser to continue to rely on rule 203(m)(1 if a non(U.S. client that is not a private fund, such as a natural person client residing abroad, relocates to the United States or otherwise becomes a United States person. As one commenter recognized, this also will establish similar treatment in these circumstances for non( U.S. advisers relying on rule 203(m)(1 or the foreign private adviser exemption F” �����&&
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