Financial Regulation Review Sheet
Monday December 16 2:35 Final
SEC Regulation Steps
1933 Act- offering of securities -private placement exemption- if it’s not made to public in advertised way -accreddited investors
1940 Act- Issuer that is a fund, fund must register if it’s an investment company (over 40% of assets in securities -qualified purchaser- high net worth individuals -fewer than 100 investors
Advisors Act- if the issuer is a fund, investment company, advisor must register -foreign advisors exemption -less than $150 million in assets exemption -fewer than 15 clients exemption taken away by Dodd-Frank Title IV
1934 Act- any person that sells securities for an individual must register as a BD -issuers exemption- family and friends
Registered investment companies must: -have independent board of directors -use vote of shareholders on key subjects -restrictions on transactions with affiliates -leverage limits -no short selling
Private Funds- Hedge funds, Collateralized Loan Oblications, Collateralized Debt Obligations, patent/intellectual property funds, venture capital funds
Volcker Rule- short term trading account for prop. Trading qualification -Covered transactions prohibited even (federal reserve act 23a) Part 1 exemptions- bank and BHC cannot prop trade except -hedging- purchased to hedge position of investor against risk -activity outside of U.S. by foreign bank (SOTUS) -shares are bought on the account of a customer -underwriting or market making -prop. Trading in U.S. government securities
Part 2- prohibits any “banking entity” from making certain investments in, and maintaining certain relationships with, a “hedge fund or private equity fund.” -solely outside U.S. -securitization of loans, may sponsor and invest in securitization -if bank sponsors fund they may invest in up to 3% of the security
Ring Fencing- Volcker Rule, remove prop. Trading from BHC family Dodd Frank Act Boxer
SEC Regulation Steps
1933 Act- offering of securities -private placement exemption- if it’s not made to public in advertised way -accreddited investors
1940 Act- Issuer that is a fund, fund must register if it’s an investment company (over 40% of assets in securities -qualified purchaser- high net worth individuals -fewer than 100 investors
Advisors Act- if the issuer is a fund, investment company, advisor must register -foreign advisors exemption -less than $150 million in assets exemption -fewer than 15 clients exemption taken away by Dodd-Frank Title IV
1934 Act- any person that sells securities for an individual must register as a BD -issuers exemption- family and friends
Registered investment companies must: -have independent board of directors -use vote of shareholders on key subjects -restrictions on transactions with affiliates -leverage limits -no short selling
Private Funds- Hedge funds, Collateralized Loan Oblications, Collateralized Debt Obligations, patent/intellectual property funds, venture capital funds
Volcker Rule- short term trading account for prop. Trading qualification -Covered transactions prohibited even (federal reserve act 23a) Part 1 exemptions- bank and BHC cannot prop trade except -hedging- purchased to hedge position of investor against risk -activity outside of U.S. by foreign bank (SOTUS) -shares are bought on the account of a customer -underwriting or market making -prop. Trading in U.S. government securities
Part 2- prohibits any “banking entity” from making certain investments in, and maintaining certain relationships with, a “hedge fund or private equity fund.” -solely outside U.S. -securitization of loans, may sponsor and invest in securitization -if bank sponsors fund they may invest in up to 3% of the security
Ring Fencing- Volcker Rule, remove prop. Trading from BHC family Dodd Frank Act Boxer