Compliance Corner Q4-2018: Regulatory Filings and Other Considerations That Hedge Fund Managers Should Note in the Coming Quarter

October 18, 2018

ACA Compliance Group's Danielle Joseph and Anthony Frattone contributed the following article to the October 18, 2018 Hedge Fund Law Report.

Fund managers will need to take steps to ensure that they are prepared to meet quarter- and year-end compliance-related deadlines, as well as take note of recent industry developments that will impact their businesses. For example, funds formed in the Cayman Islands are now required to designate individuals as anti-money laundering (AML) officers, although the deadline for certain Cayman funds to report this information to the Cayman Islands Monetary Authority (CIMA) was recently extended until December 31, 2018.

This sixth installment of The Hedge Fund Law Report’s quarterly compliance update highlights upcoming filing deadlines and reporting requirements of which fund managers should be aware during the fourth quarter and discusses recent industry developments, including the SEC staff’s recent observations on common compliance issues related to best execution by investment advisers, CIMA’s new AML requirements and the newly released draft of the Global Investment Performance Standards (GIPS 2020).

Quarterly Transaction Reports – October 30, 2018

Transaction reports reflecting all trading in “reportable securities” by an adviser’s “access persons” during the third quarter are due on or before October 30, 2018, as required by Rule 204A-1 under the Investment Advisers Act of 1940.

Most managers use some form of technology to assist with monitoring personal trading. Nevertheless, it is still fairly common for access persons to report at least a portion of their transactions in reportable securities via brokerage statements or on forms submitted to the chief compliance officer or a designee. When receiving trading-related data in these formats, fund managers need to ensure that this information is captured as part of their ongoing surveillance of personal trading. Accordingly, fund managers should either manually incorporate this information into their personal trade reporting surveillance software, or conduct manual reviews of those transactions in order to detect the same types of compliance issues that are monitored for by the managers’ technological solutions.

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