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    Jul. 17, 2025

When Investor Relations Become Procurement Lobbying

Employees in the investor relations departments of hedge fund managers and private equity firms typically do not consider themselves “lobbyists.” But state and local regulators sometimes have a different view. This guest article by Covington lawyers Zachary G. Parks, Derek Lawlor and Kimberly Railey explains the types of investor relations activities that could trigger lobbying requirements; summarizes the state lobbying registration and reporting requirements that may apply to investment firms; and describes the potential penalties for violations of the rules. It also highlights elements of investment firms’ compliance programs that can help ensure they remain on the right side of these laws and includes a list of practical questions CCOs can consider. For insights from another Covington attorney, see “The Parallels and Distinctions Between Investigations and Culture Reviews” (May 26, 2022).

The CFTC’s Advisory on Materiality Standards for Referring Violations to Enforcement

On April 17, 2025, the CFTC issued a staff advisory (Advisory) in an effort to provide greater clarity with regard to the criteria that its operating divisions will use when assessing whether to refer registered entities’ self-reported violations to the Division of Enforcement (DOE). The Advisory came on the heels of a February 25, 2025, enforcement advisory (Enforcement Advisory) that sought to promote self-reporting through a number of incentives, including giving entities the option of reporting violations to any of the CFTC’s operating divisions, rather than directly to the DOE, and establishing a Mitigation Credit Matrix for calculating how much credit to apply in settlements with self-reporting violators. Although allowing self-reporting to an operating division may sound like a significant concession to hedge fund managers that want to avoid regulatory trouble, the Enforcement Advisory still left some room for a clearer understanding of what constitutes a material violation that could trigger an operating division referral to the DOE and what to expect when self-reporting violations to operating divisions. As the CFTC admitted in the Advisory, registered entities still needed clarity about what self-reported infractions might constitute material violations. The Advisory is the CFTC’s attempt to provide that clarity. This article summarizes key takeaways from the Advisory and presents expert analysis on what it means for fund managers with respect to self-reporting. For more on the Enforcement Advisory, see “CFTC Advisory on Self-Reporting, Cooperation and Remediation Overhauls Years of Guidance” (Mar. 27, 2025).

Skills and Qualities of Effective Compliance Officers

The role of the CCO has evolved significantly in recent years, extending across industries. Contemporaneously, salaries have increased, although growth in compensation slowed in 2025 as compared to 2024, according to BarkerGilmore’s 2025 CCO Compensation Report. This article synthesizes relevant findings from the report and distills insights from the firm’s webinar, which included professionals from Radical Compliance and Spark Compliance Consulting, on the current market for CCOs; compensation trends; relevant skills and experience; and challenges facing dual-hatted GC-CCOs. See “To Work Effectively, CCOs Need Authority, Autonomy and Information” (May 22, 2025).

What to Expect on SEC Examinations Under the New Administration

Notwithstanding potential changes at the SEC as a result of the Trump administration’s efforts to slash the size of the government and eliminate burdensome regulation, it has been “business as usual” for the SEC Division of Examinations this year, according to a March 2025 Seward & Kissell LLP program on examination trends and considerations. The program covered recent examination experiences, focus areas and trends; whether an adviser should self-report compliance issues it discovers during an exam; responding to deficiency letters; avoiding referrals to the Division of Enforcement; and disclosure issues involving examinations and deficiency letters. The program featured Seward & Kissell partners Debra Franzese, Philip Moustakis and Daniel Viola. This article synthesizes their insights. See “Preparing for and Navigating SEC Examinations” (Dec. 19, 2024).

SEC Sanctions Investment Adviser and CCO for Compliance Failures That Allowed Misappropriations

In one of its first enforcement actions under the new Trump administration involving the private funds industry, the SEC has settled charges against a registered investment adviser and its former managing partner and CCO, as well as its former COO and partner. Although the enforcement actions arose from misappropriations and clearly egregious conduct, there are nuances that may provide useful insights into how the SEC will approach CCO liability and other compliance issues under the new Trump administration. This article summarizes the two settlement orders and provides key takeaways from interviews the Hedge Fund Law Report conducted with industry experts about the enforcement actions. For coverage of other SEC actions against CCOs, see “SEC Sanctions Adviser for Registration, Disclosure and Compliance Violations and Bars Its Inexperienced CCO” (Oct. 28, 2021); and “SEC Fines and Bars CCO From the Funds Industry for Compliance Failures and Deceiving Examiners” (Mar. 11, 2021).

Akin Adds Skye Smith to Expanding Office in Abu Dhabi

Akin announced that Skye Smith has joined the firm as a partner in its investment management practice. Smith will begin in the Dallas office and relocate to Abu Dhabi in the coming months, where she will focus on helping clients deploy capital across asset classes through tailored structures that align with their strategic, regulatory and governance priorities. See “Key Issues When Establishing and Marketing Funds in Dubai and Abu Dhabi” (May 9, 2024); “New U.K. LTAF, Updated E.U. Marketing Regulations and Trends in the Middle Eastern Private Funds Industry (Part Two of Two)” (Mar. 17, 2022); and “The Global Hedge Funds Landscape: Europe, Asia and the Middle East (Part Two of Two)” (Jul. 15, 2021).

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Women to Watch: Contributions, Achievements and Observations of Outstanding Female Professionals

To mark International Women’s Day, women editors and reporters at ION Analytics interviewed outstanding women in the industries and jurisdictions we cover. In this part, Law Report Group editors Jill Abitbol, Robin L. Barton and Megan Zwiebel profile notable women in data privacy, cybersecurity, private funds and anti-corruption law, including Anne-Gabrielle Haie, Jessica Lee, Micaela McMurrough, Laura Perkins, Amanda Raad, Madelyn Calabrese, Ranah Esmaili and Genna Garver. Enjoy reading their inspiring remarks here.