Publication
Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
United States | Publication | January 2022
The US Securities and Exchange Commission (SEC) continues to signal that it is expanding oversight of private funds. On January 26, 2022, it announced that it is seeking to impose additional reporting requirements for large hedge fund and private equity advisers. These proposed amendments come on the heels of the SEC's recent announcement that it will more closely scrutinize the transaction costs and fees charged by private equity and hedge funds, which we wrote about in this client alert and in this article. As further evidence of this closer scrutiny, on January 27, the SEC's Division of Examinations published a risk alert detailing compliance issues observed by its staff during their examinations of private fund advisers. These observed compliance issues include: (A) failure to act consistently with disclosures; (B) use of misleading disclosures regarding performance and marketing; (C) due diligence failures relating to investments or service providers; and (D) use of potentially misleading "hedge clauses" (i.e. clauses that seek to limit an adviser's liability). In light of these observations and the recently proposed amendments, private equity and hedge funds should be aware that the SEC remains focused on their conduct and should take proactive measures to ensure compliance with the new requirements stemming from such efforts.
The new amendments proposed by the SEC concern Form PF—the confidential reporting form for certain SEC-registered investment advisers to private funds. If passed, the amendments would impose additional reporting requirements for large hedge fund and private equity advisers. According to the press release, the amendments are "designed to enhance the Financial Stability Oversight Council's (FSOC) ability to assess systemic risk as well as to bolster the Commission's regulatory oversight of private fund advisers and its investor protection efforts in light of the growth of the private fund industry." Chairman Gary Gensler explained that the main goal of the proposals is to allow regulators to better spot risks building up in private markets, stepping up an effort that began after the 2008 financial crisis: "the SEC has now had almost a decade of experience analyzing the information collected on Form PF . . . [w]e have identified significant information gaps and situations where we would benefit from additional information."
As such, the proposed amendments would increase reporting requirements in the following manner:
The proposed amendments will be open for comment for 30 days following their publication in the Federal Register.
Special thanks to Emma Yeremou-Ngah for her assistance in the preparation of this content.
Publication
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Publication
On February 2, 2024, the Belgian Presidency of the Council of the European Union confirmed that the Committee of Permanent Representatives had signed the Artificial Intelligence (AI) Regulation, referred to as the AI Act. Approval by the EU Parliament followed on 13 March 2024, and the AI Act is likely to appear in the EU’s Official Journal around May 2024. The AI Act aims to establish a stringent legal framework governing the development, marketing, and utilisation of artificial intelligence within the region, thereby marking a significant advancement in the regulation of this burgeoning domain.
Publication
The private credit market and direct lending have grown and diversified immensely in the past decade, offering alternative sources and terms of debt compared to those historically provided by the syndicated leveraged loan and public issuance markets. Consequently, they are fast becoming pivotal components in the capital ecosystem, so much so that the Bank of England consider that the private credit market is currently responsible for approximately $1.8 trillion of debt issuance, which is four times its size in 2015. This growth has been particularly pronounced in Europe and the US but there has also been significant activity in Asia.
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2023