- Pros take aim at broker dealer registration, fees and expenses
- Industry group represents middle-market firms
- Schedules meetings with the SEC
The effort is part of the ACG’s move to grow its regulatory and lobbying presence in Washington by reaching out both to the SEC and lawmakers on Capitol Hill. The 61-year-old organization is branching out from its roots as an organizer of local networking events around the country.
After forming the Private Equity Regulatory Task Force (PERT) and surveying GPs on their primary concerns, ACG is working with private equity firms on six initiatives: broker dealer registration, co-investments, code of conduct, fees and expenses, marketing and advertising, and valuations.
ACG held a meeting on Feb. 12 to chart out its next moves as sub-groups tackle each of the six topics. A steering committee overseeing the effort is led by Richard Jaffe, partner at Duane Morris, Gretchen Perkins, partner at Huron Capital Partners, and J.B. Dollison, principal at Crutchfield Capital Corp.
Pam Hendrickson, chief operating officer of The Riverside Co and immediate past chairman of ACG, said that of the six topics, broker dealer issues, marketing/advertising, and fees/expenses are drawing significant interest from members of PERT.
PERT is made up exclusively of private equity chief financial officers and chief compliance officers who hope to meet with regulators and explain how the industy works. ACG also employs outside counsel and a publc policy director to help coordinate the effort with industy pros. One objective would be to obtain no action letters, documents issued by the SEC to clear up any ambiguities in the rules.
Over the next several months, each group will work to produce first drafts of middle-market practices on these topics, to help guide chief financial officers and chief compliance officers at private equity firms.
Another effort under way is a possible “fly-in activity” in the spring for PERT members to meet with various public officials in Washington, Hendrickson said.
Cybersecurity is also looming as a topic with regulators and private equity firms, she said.
An SEC spokeswoman declined to comment on meetings with ACG members.
The SEC released a Risk Alert on cybersecurity earlier this month to advise firms on ways to protect their accounts. Among the documents included in the alert, the SEC’s Office of Compliance Inspections and Examinations shared observations based on its examinations of more than 100 broker dealers.
In another fresh move by the SEC, the commission on Feb. 11 named Heather Seidel chief counsel for the division of trading and markets. She previously worked as associate director in the division’s office of market supervision.
Seidel took the job vacated by David W. Blass, who now works at the Investment Company Institute as general counsel. Blass popped up on the radar screens of private equity firms after his 2013 speech that said industry players may be required to register as broker dealers under the Securities Exchange Act of 1934. He cited two reasons for registration: paying staff transaction-based compensation for selling interests in funds and charging portfolio companies transaction-based compensation for investment banking or related services.
Last year reports surfaced that regulators would possibly issue an exemption for private equity shops on broker dealer registration, but it remains a topical issue for the industry.
The speech by Blass sparked the ACG and its middle-market member firms to step up their efforts to participate as much as possible in the regulatory process.
Scott Gluck, counsel at Venable LLP who works with the ACG, said in a Buyouts column last year that the group continues to talk to the SEC as it works toward future guidance that is favorable for the industry.
In one milestone for ACG, Marc Wyatt, deputy director of the SEC’s Office of Compliance Inspections and Examinations, addressed an audience of 100 during ACG’s Middle-Market Public Policy Summit in January. Among the events, Riverside Co’s Hendrickson moderated a panel, “The Politics of Policy” with Amy Walter, national editor of The Cook Political Report and the former political director for ABC News.