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Private Fund Regulatory Developments 2021


Speaker(s): Brendan R. Kalb, Justin Lange, K. Susan Grafton, Ken C. Joseph, Manuela Amado Cattaneo, Maurya C. Keating, Michael C. Neus, Philip Hinkle, Randolph A. Stuzin, Regina G. Thoele, Robyn A. Huffman, Sarah York
Recorded on: Jan. 28, 2021
PLI Program #: 306914

 


Brendan Kalb is the General Counsel of ExodusPoint Capital Management, LP. Prior to joining ExodusPoint, Brendan was a partner in the Investment Management Group at Morgan Lewis in New York.  Prior to joining Morgan Lewis, Brendan was the General Counsel at AQR Capital Management, LLC, a quantitative registered investment adviser based in Greenwich, CT, where he was responsible for managing the full spectrum of the firm’s legal affairs.  Prior to joining AQR, Brendan worked as an associate at the law firms of Willkie Farr & Gallagher and Seward & Kissel.  Brendan received his JD from Cornell Law School and graduated magna cum laude with a B.A. in International Relations & Economics from the University of Pennsylvania.  Brendan has served as a member of the Board of the Directors of the National Futures Association and as member of the Managed Funds Association’s Investment Adviser and Government Affairs Committees, and as Chairman of the MFA’s CTA, CPO and Futures Committee.  Brendan also serves on the Board of Advisors of the Institute for Law and Economics, a joint research center between the Law School, the Wharton School and the Department of Economics at the University of Pennsylvania.


Ken C. Joseph, Esq. is a Managing Director and Head of the Financial Services Compliance and Regulation practice for the Amercias at Kroll, LLC. (Duff & Phelps rebranded as Kroll in 2021), based in the New York office. From 2018-2020, he served as Global Leader of Kroll’s Disputes Consulting practice.  He is also a fellow of the Kroll Institute, providing thought leadership on a variety of financial services and regulatory matters, as well as Head of the firm’s Cryptocurrency Task Force. Ken focuses on serving clients who need informed and proven strategies to successfully navigate a broad spectrum of threats arising from investigations, compliance examinations, litigation, and crisis scenarios. At Kroll, Ken has provided expert testimony and reports on various regulatory compliance and enforcement matters, counseled on multiple high-profile investigations, advised SEC-registered entities on ESG policies and practices, conducted due diligence in the context of M&A transactions, and guided innovators on various digital currency structures and proposed offerings.  He has a unique combination of front-line expertise and experience in U.S. securities law, regulatory compliance, and corporate governance. Ken served with distinction for a total of over 21 years at the U.S. Securities and Exchange Commission, including service as one of the inaugural supervisors in the Division of Enforcement’s specialized Asset Management Unit, and most recently as a Senior Officer in the Commission’s Division of Examinations (f/k/a as the Office of Compliance Inspections and Examinations). He has investigated, supervised, and resolved numerous complex and high-profile cases involving a wide variety of alleged misconduct by market professionals, other individuals, and by public and private entities.

Ken’s extensive docket of cases and compliance examinations at the SEC included allegations and/or findings of breaches of the anti-fraud provisions, fiduciary duty, disclosure, custody and compliance requirements, as well as the anti-corruption, data privacy and cybersecurity obligations under the federal securities laws. In total, his enforcement and examination matters on behalf of the SEC resulted in the payment of over $1 billion in monetary relief to shareholders, investors, and clients. He was responsible for conducting numerous parallel investigations and successful actions in conjunction with federal, state, and local law enforcement authorities. And, he led his team’s response to regulatory concerns involving reinsurance products, special purpose vehicles, credit default swaps, auction rate securities, cyber-intrusions, Brexit, high-yield bonds, fee and expense allocations, undisclosed conflicts, and share class selection, among others. While at the SEC, Ken served in leadership positions on several governance committees, including the National Exam Program’s Executive Committee and as co-chair of the Risk and Exam Process Committee, where he helped develop national and local examination initiatives and priorities. He also served on the Risk Analytics Committee and contributed to the development of technology solutions to improve his program’s analytical capabilities, efficiency, and techniques used to identify actual or potential misconduct.

Ken holds a Juris Doctor degree from the University of North Carolina at Chapel Hill School of Law. He also earned B.S., MBA, and post-graduate degrees in Marketing Management and International Finance from St. John’s University, New York.  He earned a Certificate in Securities & Financial Regulation from the Georgetown University Law Center (through the SEC), and a Certificate in Strategic Management of Regulatory and Enforcement Agencies, from the Harvard University, John F. Kennedy School of Government, Executive Education.  Ken is admitted to practice law in the U.S. District Court for the Southern and Eastern Districts of New York, as well as the States of New York and Connecticut. He is a frequent speaker at industry panels on matters relating to SEC enforcement and securities law compliance, governance, and risk management and has represented the SEC on several foreign technical assistance missions. Ken also has substantial experience interacting with U.S. and foreign regulators and law enforcement agencies from the state, federal, and international levels, including those from the Department of Justice, the Federal Bureau of Investigation, the United States Postal Inspection Service, the Financial Industry Regulatory Authority, the Federal Reserve, and state securities regulators. 

Prior to joining the SEC, Ken worked in the financial services industry, as well as in academia.  He is a former Associate Dean of the largest undergraduate college within a major New York-area university. He currently serves on the Board of Directors of the Harvard Kennedy School NY/NJ/CT Alumni Network (President), University Settlement, the University of North Carolina Law Alumni Association, and through June 2021 on the School Leadership Team of Ft. Hamilton High School, Brooklyn, NY. 


Maurya Crawford Keating is an Associate Regional Director in the New York Regional Office of the U.S. Securities and Exchange Commission.  She joined the Investment Adviser/ Investment Company unit of the SEC’s Office of Compliance, Inspections and Examinations in 2018. 

Before joining the SEC, she was a Lead Director and Associate General Counsel in the National Compliance Office of AXA Equitable Life Insurance Company.  Her work for AXA Equitable included advising on a wide range of securities, insurance and investment advisory compliance, product and distribution issues, including international legal and compliance issues associated with AXA Equitable’s affiliation with AXA Group, a global financial services organization.  Maurya was also Vice President, Chief Broker-Dealer Counsel & Investment Advisor Chief Compliance Officer of AXA Advisors, LLC, a full-service broker-dealer and investment adviser.  Prior to AXA Equitable, she was an Associate General Counsel at New York Life Insurance Company and Royal Alliance Associates, Inc.

Maurya received her J.D. from St. John’s University School of Law, and her B.A. and M.A. from The Catholic University of America. She is admitted to practice as an attorney in New York state, and is on the Roll of Solicitors of the Law Society of England & Wales.


Michael C. Neus serves as the Fellow in the Private Funds Branch of the Investment Adviser Regulation Office, a unit of the SEC’s Division of Investment Management in Washington, DC.  The Private Funds Branch focuses on regulations affecting private fund advisers and assists the Commission in developing policy relating to private funds and private fund advisers. 

Michael has 25+ years as General Counsel and Chief Compliance Officer for many leading private funds.


Philip T. Hinkle provides advice to U.S. registered funds (including open-end and closed-end funds) and their investment advisers and boards on a wide range of aspects of the fund business. Mr. Hinkle has significant experience with registered funds’ use of derivatives, leverage, and alternative strategies, registered fund and investment adviser merger transactions, and a broad range of other regulatory and compliance matters and fund governance issues applicable to registered funds. Mr. Hinkle also advises private fund managers on establishing new registered fund businesses.

Mr. Hinkle is actively engaged in the firm’s global derivatives and structured products practice. He regularly works with U.S. and non-U.S. investment managers and other financial institutions in engaging in a range of derivatives and other transactions. Mr. Hinkle represents clients in negotiating derivative, repurchase agreement, cleared repurchase agreement, and other trading documentation. He also advises clients on related regulatory matters, including compliance with requirements under the Investment Company Act of 1940, requirements adopted under the Dodd–Frank Act, and other requirements under the Commodity Exchange Act. Mr. Hinkle also regularly advises clients on requirements on commodity pool operators and commodity trading advisors.

The most recent edition of Chambers USA recognized Mr. Hinkle as an “Up and Coming” lawyer for Investment Funds: Regulatory & Compliance. The directory notes that clients comment that he is “very practical, solution-oriented and highly responsive.” Mr. Hinkle was recognized as a Rising Star in the area of investment funds in the IFLR1000’s Financial and Corporate 2017 guide. In 2016, he was named a Rising Star by the Mutual Fund Industry Awards 2016, selected by the editorial staff of Fund Action and Fund Directions. He was also recognized in the 2016 edition of The Legal 500 (US) in the area of mutual/registered funds.

Mr. Hinkle serves as Co-Chair of Dechert’s LGBTQ Affinity Group and is also a member of the Firm’s Hiring Committee.

 


Randy Stuzin is a Member and General Counsel of King Street Capital Management GP, L.L.C., where he is responsible for the firm’s global legal and compliance departments.  Prior to joining King Street in March, 2014, Randy spent 14 years at Goldman, Sachs & Co. , where he was Managing Director and General Counsel of the Investment Banking Division, overseeing a team of securities, capital markets and M&A lawyers around the world, and also served as Global Head of Business Selection and Conflicts Clearance for the Equities and FICC Divisions. Randy was previously a Vice President in the Legal Department at Lehman Brothers and began his career as a corporate associate at Cravath, Swaine and Moore. Randy received a B.S. from Cornell University and a J.D. from New York University School of Law.


Regina G. Thoele is Senior Vice President of Compliance at NFA.  Her current responsibilities include overseeing the Compliance Department's exam, investigation, financial surveillance, and risk management programs; working on enforcement cases; advising Members on compliance issues; assisting NFA Member committees; participating in industry conferences; and developing and monitoring Compliance Department goals.  In addition, Ms. Thoele works with NFA’s Legal Department to develop rules and interpretive guidance, makes presentations to NFA’s Executive Committee and Board of Directors and to other outside organizations, and develops strategic plans and initiatives for NFA’s Compliance Department.  From July 1994 until March 1998, Ms. Thoele held the position of Arbitration Manager and was responsible for supervising staff and helping manage the Arbitration program.  Ms. Thoele has also served as an adjunct faculty member at the Illinois Institute of Technology, where she taught a compliance course. 

Ms. Thoele attended Indiana University and received a B.S. degree in finance.  Ms. Thoele also received her designation as a Certified Regulatory and Compliance Professional through the NASD Institute at The Wharton School, as well as her designation as a Certified Fraud Examiner through the Association of Certified Fraud Examiners. 


Robyn A. Huffman is General Counsel and Chief Compliance Officer of FCO Advisors LP and is a member of the Senior Management Team. Ms. Huffman is responsible for overseeing the compliance program and legal matters. Prior to joining the firm, Ms. Huffman was a Managing Director and Associate General Counsel at Goldman Sachs, where she spent sixteen years managing legal and regulatory matters for Goldman’s fixed income businesses in the U.S. At Goldman, she had diverse product-level responsibilities as well as regulatory and compliance duties. Prior to her tenure at Goldman, Ms. Huffman was a partner in the New York office of Orrick, Herrington & Sutcliffe LLP, where her practice focused on debt financings for state and local government capital projects, municipal asset securitizations, debt restructuring and complex project finance transactions with a municipal component. Ms. Huffman earned both her B.A. and J.D. from the University of Illinois, where she was a member of the Law Review.


Justin, is Assistant General Counsel in the Principal Financial Group’s legal department, and counsel to Principal Global Investors and Principal International. He provides legal advice to Principal’s global asset management business, including Principal Global Investor’s global compliance department, on a wide variety of regulatory matters.  Justin serves on Principal Global Investor’s global fixed income and equity trading committees.  In addition, Justin provides guidance to Principal’s global asset management business relating to both individually-managed client arrangements and pooled investment vehicles across fixed income, equity, real estate, currency and derivative strategies in the Americas, Europe, MENA and Asia. Prior to joining the Principal Financial Group in 2006, Justin was an associate at a national law firm working in its venture capital and corporate finance practice groups. He received his B.B.A. in Accounting and Juris Doctor from the University of Iowa.  


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.

 


Ms. York is the General Counsel of Hudson Advisors L.P. (“Hudson”), a globally integrated asset manager focused on real estate, credit, equity, and other financial assets.  In this role, Ms. York is responsible for the overall legal and compliance functions of Hudson globally. Additionally, she oversees tax structuring. Ms. York is a member of the Hudson Board of Directors, as well as Hudson’s Executive and Operational Risk Committees. Ms. York is the Chairman of Hudson’s Legal and Compliance Risk Committee. Ms. York has over 15 years of experience in corporate transactions. Ms. York joined Hudson in April 2014 and has held various positions, including Managing Director and Deputy General Counsel and Vice President and Counsel with a focus on European transactions and related matters.

Prior to joining Hudson, Ms. York was a Special Counsel in the Dallas, Texas office of Baker Botts LLP, where she advised on various corporate transactions, with a particular focus on M&A transactions for clients in a variety of industries. Ms. York holds a B.A. in Economics and Political Science from the University of Kansas and a J.D. from Duke University School of Law.