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Hedge Fund Registration and Compliance 2010


Speaker(s): Diane Citron, Geoffrey F. Aronow, J. Patrick Cave, James A. Capezzuto, Josephine J. Tao, K. Susan Grafton, Lee A. Schneider, Michael R. Butowsky, Stuart J. Kaswell
Recorded on: Apr. 9, 2010
PLI Program #: 23372

Josephine J. Tao is Assistant Director for the Office of Trading Practices in the SEC's Division of Trading and Markets. Ms. Tao graduated “with high honors” from the George Mason University School of Law in 1997.  She was a business and tax associate at Porter, Wright, Morris and Arthur LLP before joining the SEC in 2000.   She was previously an attorney in the Division’s Office of Enforcement Liaison and Institutional Trading and a branch chief in the Office of Trading Practices.


Geoffrey Aronow is a partner in the Washington, DC office of Sidley Austin LLP.  He is a former Securities and Exchange Commission (SEC) General Counsel as well as Chief Counsel and Senior Policy Advisor in the SEC’s Office of International Affairs (OIA), and Director of Enforcement at the Commodity Futures Trading Commission (CFTC).  His extensive experience in private practice includes:

  • Representing parties in investigations and adjudicatory proceedings before the SEC, CFTC, Federal Energy Regulatory Commission and other federal financial regulatory agencies;
  • Participating in rulemakings and other matters before administrative agencies in connection with policy issues and initiatives, particularly with regard in international regulatory issues;
  • Advising on compliance with statutory and regulatory requirements;
  • Litigation in federal courts, at both trial and appellate levels, under the federal securities and commodities laws and other statutes, as well as constitutional and civil rights matters;
  • Formulating and executing strategy for legislative initiatives, forming coalitions, providing analysis of legislative alternatives, drafting materials for legislative hearings and meetings, and
  • Advising clients in connection with Congressional investigation and oversight hearings.

As SEC General Counsel, Geoffrey served as the chief legal officer of the Commission.  As OIA Chief Counsel and Senior Policy Advisor, Geoffrey provided legal and policy advice to the OIA Director and served as legal advisor to OIA. He oversaw the coordination of OIA input on international practices relevant to rulemakings, SEC and staff interpretive guidance and policy development.  Geoffrey also served as Senior Counsel to Chair Mary Jo White during his tenure at the SEC.

From 1995 to 1999, as CFTC Director of Enforcement, Geoffrey oversaw its division responsible for investigating and prosecuting civil violations of the Commodity Exchange Act and CFTC regulations.

Geoffrey was listed in The National Law Journal’ s “Governance, Risk and Compliance: Trailblazers & Pioneers 2014” and was selected as a Leading Lawyer in Derivatives Law by The Best Lawyers in America in 2010-2012 and 2017, and a Top Rated Securities & Corporate Finance and Securities Litigation Lawyer in Washington, DC. in Super Lawyers for 2010-12 and 2017-18.

Education:
JD, Yale Law School, 1981; BA, Yale College, 1976 (with distinction, summa cum laude, phi beta kappa)

Selected Publications:

  • “Projections Of The Imagination: When Is A Token Actually Delivered?” 38 Futures & Derivatives Law Reporter 11 (Jan. 2018)
  • “Enforcement Risk: The Long Length of the CFTC’s Reach,” NY Business Law Journal (Winter 2015)
  • “10 Things You May Have Missed In Proposed Regulation AT,” Law360 (Dec. 21, 2015)
  • Co-author, “CFTC Asserts Jurisdiction Over Bitcoin Derivatives,” FinTech Law Report (Nov./Dec. 2015)
  • “The CFTC’s Not-So-Hidden Message: Traders Beware,” CoinDesk.com (Oct. 3, 2015)
  • “Back to the Future: The Use of Administrative Proceedings for Enforcement at the CFTC and the SEC,” 35 Futures & Derivatives Law Reporter 1 (Jan./Feb. 2015)
  • Co-author, “Chapter 4: Auditors Responsibilities and the Law,” A Guide to Forensic Accounting
  • Investigation, 2nd Edition (May 2011)
  • “What Constitutes ‘Manipulation’ or ‘Disruptive Practices’ After Dodd-Frank? A Difficult Set of Standards for Traders to Live By Gets More Difficult,” 30 Futures & Derivatives Law Report No. 9 (Sept. 2010)


MICHAEL R. BUTOWSKY Partner, Jones Day, New York City.  Michael Butowsky’s principal areas of practice include advising investment advisers with respect to legal and compliance matters (including issues relating to registration and additional SEC filings, disclosure, conflicts of interest, soft dollars and best execution, allocations of investment opportunities, the structuring of compliance programs, and SEC exams); advising clients with respect to the formation of, and offering of interests in, private investment funds (e.g., hedge funds, private equity funds and other alternative investment vehicles) and investors with respect to investments in funds; broker-dealers with respect to regulatory matters, as well as the negotiation of soft-dollar and other brokerage arrangements; and companies with respect to investment adviser, broker-dealer and investment company “status” issues.

Mr. Butowsky has written extensively and is a frequent speaker at financial services industry conferences.


Stuart J. Kaswell is MFA’s Executive Vice President & Managing Director, General Counsel. In his role as chief legal officer, Stuart represents the hedge fund industry on domestic and international legislative and regulatory policy issues. Stuart works directly with MFA’s President & CEO to oversee all legal aspects of the Association’s legislative and regulatory policy initiatives in Washington and around the world.

Prior to joining MFA, Stuart was Partner in Bryan Cave’s White Collar Defense & Investigations, Securities Litigations & Enforcement practice groups and focused on issues including financial services regulation and short sale regulation. Previously, Stuart was Partner in the financial services group at Dechert, LLP. Stuart was Senior Vice President and General Counsel, Securities Industry Association for nearly a decade (1994-2003) serving as chief legal officer and responsible for all legal and regulatory matters. Prior to that, he was Republican (Minority) Counsel, Committee on Energy and Commerce, U.S. House of Representatives. Earlier in his career, (1979-1986) he held several positions at the Securities and Exchange Commission, including as branch chief, OTC regulation, during which time he was responsible for oversight of the NASD. Stuart received his A.B. in political science from Vassar College with General and  Departmental Honors, and his J.D., from Washington College of Law, The American University. His bar admissions include Virginia, District of Columbia, Maryland, U.S. Supreme Court and various Federal Courts.


K. Susan Grafton counsels a wide variety of broker-dealers, including U.S. and multinational broker- dealers, full service firms, institutional and retail broker-dealers, equity and fixed income alternativetrading systems, investment banking boutiques, and private placement agents as well as securities exchanges. She has been ranked nationally by Chambers USA in the Broker-Dealer (Compliance) category since 2010 and is recognized in The Legal 500 US for fintech. In the most recent edition of Chambers, clients noted that "She helps us to think through complex issues with recent SEC issues and how to navigate them. She is a very keen listener and spends a lot of time trying to understand our business and the outcomes that we desire. She is a terrific lawyer who really supports her clients well." "Susan is an expert on broker-dealer regulation - thoughtful, engaging, knowledgeable and practical." Past editions noted that “the ‘very smart’ Susan Grafton demonstrates strength advising global broker- dealers and investment banks on a comprehensive range of regulatory matters. Her compliance expertise encompasses, among other areas, SEC, FINRA and CFTC regulations. A source says: ‘She has a wealth of experience and knows how to apply it practically to clients.’”

Ms. Grafton’s practice includes representing broker-dealers in all aspects of regulatory compliance,beginning with assisting them in registering with the SEC – as alternative trading systems as well as broker-dealers – and obtaining membership in the Financial Industry Regulatory Authority (FINRA) and other self-regulatory organizations (SROs). As part of this process, she drafts all needed documents, such as written supervisory procedures, customer account documents, soft dollars and commission sharing agreements, and electronic access agreements. She also advises clients on new business initiatives and assists them in obtaining required SRO and state approvals. Similarly, she handles the regulatory approvals in connection with changes of control of broker-dealers. Ms. Grafton also advises clients on broker-dealer status questions for themselves and their employees, including compliance with the Rule 15a-6 safe harbor for foreign broker-dealers and drafts agreements and procedures related to the same.

Ms. Grafton’s practice is wide ranging and includes advising clients on regulatory issues related to nearly every aspect of a broker-dealer’s business, financial, operations and supervisory responsibilities. For example, she advises clients on compliance issues relating to Regulations ATS, NMS, SCI and SHO; sponsored access and other electronic trading issues; large trader and position reporting; suitability and standard of care issues; Regulation M and FINRA’s corporate finance rules; information barriers and insider trading; soft dollars and commission sharing arrangements; research, social media and other written communications; political contributions, outsourcing and expense sharing arrangements; the net capital and customer protection rules; cyber security and data protection issues; books-and-records requirements; and OATS and trade reporting. She is frequently consulted on strategic issues, including the implications of acquiring other financial institutions and developing compliant management and supervisory structures. Ms. Grafton has drafted firmwide and business- specific policies and procedures.

She also represents retail investment advisers, hedge fund and other private fund managers, research providers and trade associations representing the financial services industry. She has been involved in several key policy issues arising from the Dodd-Frank Act, including the uniform standard of care for broker-dealers and investment advisers, municipal advisor registration, private fund adviser registration, and compliance officer responsibilities under new CFTC rules.

Ms. Grafton frequently represents broker-dealers and investment advisers before the SEC and FINRA in connection with regulatory examinations and enforcement investigations pertaining to a wide range of issues, including most recently registration requirements; Rule 15a-6 “chaperoning” arrangements; outside business activities; best execution; markups and markdown, Regulations ATS, M, NMS and SHO; the net capital and customer protection rules; margin requirements; wrap accounts; disclosures; prospectus delivery; supervision; and marketing materials and advertising. She also regularly conducts in-house training on a variety of topics, including preparation for regulatory examinations.

Ms. Grafton has a unique combination of regulatory, in-house and law firm experience. She began her career with the SEC’s Division of Trading and Markets (formerly Market Regulation) where she was responsible for interpretations and no-action relief with respect to the net capital and customer protection rules and broker-dealer books and records requirements. She also led several significant rulemaking initiatives, including the proposal and adoption of Regulation M and amendments to Rules 10b-18, and provided regulatory exemptions and interpretations that facilitated numerous multinational securities offerings, merger transactions, and exchange offers. Subsequently, Ms. Grafton served as a vice president and associate general counsel of Goldman Sachs where she advised on a variety of strategic, regulatory compliance and operational issues related to the firm’s institutional equities sales and trading businesses. Ms. Grafton is currently a member of the Board of Trustees of the SEC Historical Society.

 


Lee A. Schneider is a financial services and technology lawyer based in NYC. He serves as general counsel for Ava Labs, a leading blockchain software company. Lee co-hosts a FinTech podcast with former SEC Commissioner Troy Paredes, available on iTunes and other podcast services. Lee is the father of two wonderful, exhausting college students and learns about Japanese art history from his wife.


James Capezzuto is the chief compliance officer for Oppenheimer Asset Management and its affiliated advisers. Previously, Mr. Capezzuto was an associate regional director at the Securities and Exchange Commission, responsible for the New York regional investment adviser and investment company exam programs. He has also served as a chief compliance officer at New York Life Investors,  US counsel and chief compliance officer at Aberdeen Asset Management, senior counsel at UBS Global Asset Management, chief compliance officer at Banc of America Alternative Strategies and senior counsel at Deutsche Bank/Morgan Grenfell Asset Management. Mr. Capezzuto received his JD from New York Law School and his BA in English from the University at Buffalo. He has over 25 years of legal and compliance experience in the asset management industry.