September 2005 Archives
FTC Fines Hedge Fund Manager $350,000 for HSR Violations
The Federal Trade Commission recently accused a hedge fund manager of violating the Hart-Scott-Rodino Act by failing to report to the FTC and Department of Justice when his fund bought more than $50 million of stock in two different companies on two separate occasions. The hedge fund manager, Scott Sacane, agreed to pay a $350,000 fine. The fine here was relatively modest considering that Mr. Sacane’s total exposure was over $17 million or $11,000 per day for each day of violation. Hedge funds and other financial institutions that actively trade for house accounts (so-called proprietary trading) are particularly vulnerable to falling afoul (even inadvertently) of the reporting requirements of the HSR Act.
SEC Proposes Revised Interpretation of Soft Dollars Safe harbor Under Section 28(e)
At yesterday’s open meeting, the SEC proposed a slightly revised interpretation of the safe harbor found in Section 28(e) of the Securities Exchange Act of 1934 ("Safe Harbor") that will further clarify, and partially restrict, the SEC’s interpretation of the phrase "research and brokerage" within that Safe Harbor. The proposed interpretation largely repeats the standard put forth in the SEC’s 1986 interpretation of the Safe Harbor (1986 Release) that the term "research” includes an item that provides lawful and appropriate assistance to a money manager in its investment decision-making. The release will not impact the discussions of best execution, third-party research or mixed-use items in the 1986 Release.