Chad Estep

U.S. Securities and Exchange Commission and Exchange Commission - Cease and Desist Order Against Farnham Fisher Collins, dba Collins Capital Management - Subject - Custody Rule Violations - Fined - $65,000 This proceeding arises out of the failure of former registered investment adviser Collins Capital Management (“CCM”), an unincorporated sole-proprietorship of Farnham Fisher Collins (“Collins”), to comply with the independent verification requirement for client funds and securities for which it had custody for the period of at least 2012 through 2023, in violation of Section 206(4) of the Advisers Act and Rule 206(4)-2 thereunder, commonly referred to as the “Custody Rule.” 2. Respondent also failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder with regard to client accounts of which it had custody, in violation of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.  "Red-flags" existed in 27% of the operational risk conditions Convergence Inc measured in Collins during the infraction period including our favorite, the conflicted Chief Compliance Officer. 35% of the 14 Compliance functions tested had red flags. Question for #investors, would you have invested with Colony if you knew these red flags existed at the time? https://lnkd.in/dvn8NauJ #hedgefunds #privateequity #realestate #duediligence #riskmanagement #forensicaccouting #compliance #rias #fundadministrators #auditors #datascience #AI #datascience #ODD

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In a recent decision, the First Circuit granted summary judgment to Puerto Rico’s Milk Industry Regulatory Office, holding that its sale of a debtor’s milk quota did not violate the automatic stay provided under the debtor’s chapter 12 petition. The Court found that the police power exception applied because the proceeding involved Puerto Rico’s public policies in milk regulation and because the Office had no financial interest in the sale.   Patterson Belknap Partner Dan Lowenthal and Associate Jonah Wacholder explore the Court’s reasoning behind the ruling in the firm’s latest Bankruptcy Update Blog post: https://lnkd.in/eRsnJs5v

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Florida added a new fund manager rule in 2024. It also changed one of its most important rules—Here's what you need to know: Florida now offers two exemptions for fund managers: (1) a modified "De Minimis Exemption", (2) a new Private Fund Adviser exemption ("PFA Exemption"). 𝟭. 𝗗𝗲 𝗠𝗶𝗻𝗶𝗺𝗶𝘀 𝗘𝘅𝗲𝗺𝗽𝘁𝗶𝗼𝗻—§𝟱𝟭𝟳.𝟭𝟮(𝟭𝟲)(𝗯)(𝟳) • Under the old De Minimis Exemption (2023), an adviser was exempt from investment adviser rules under Florida law if they met two criteria: (1) they did not publicly present themselves as an investment adviser, and (2) they had no more than 15 "clients" within 12 consecutive months in Florida. However, under the amended rule, the number of clients decreased to "fewer than six (6) clients who are residents of this state". What is a "𝗖𝗹𝗶𝗲𝗻𝘁"—is that the private fund itself or a limited partner? —"[T]he term “client” has the same meaning as provided in SEC Rule 275.222-2, 17 C.F.R. s. 275.222-2, as amended". • After going through some regulatory hoops, we end up with this definition: —"A ... limited partnership, limited liability company, ... or other legal organization ... to which you provide investment advice based on its investment objectives rather than the individual investment objectives of its ... partners, limited partners, members, or beneficiaries." (LPs are considered "owners"). This is a major shift in that the old rule provided for 15, not 5 "Clients" (essentially, private funds). 𝟮. 𝗣𝗙𝗔 𝗘𝘅𝗲𝗺𝗽𝘁𝗶𝗼𝗻—§𝟱𝟭𝟳.𝟭𝟮(𝟮𝟮) Under the new PFA Exemption, a "private fund adviser" (defined as an investment adviser exclusively advising qualifying private funds under Sections 3(c)(1) or 3(c)(7) of the Investment Company Act) is exempt from registration if they meet these conditions: 1) Neither the adviser nor affiliates are subject to SEC "bad actor" disqualifying events 2) The adviser files a short Form ADV with the Florida Office of Financial Regulation 3) Additional requirements apply for advisers managing 3(c)(1) funds that are not venture capital funds: a) The fund must be beneficially owned entirely by accredited investors b) The adviser must provide written disclosure to beneficial owners regarding services, duties, and material information affecting rights/responsibilities Key advantages of the PFA Exemption over the De Minimis Exemption: • Can manage more than 5 funds/SPVs. • No prohibition on "holding out" as an investment adviser • Allows for more public discussion of advisory business (social media) • Provides a clearer path for Rule 506(c) exempt fund solicitation • Fewer regulatory hurdles while providing more operational flexibility Notable aspects of both exemptions: • Does not require limiting beneficial owners to "qualified clients" • Does not require annual audits • More manager-friendly than the NASAA Model Rule Source: Florida 2024 Statutes, https://lnkd.in/g9Q_ugsP

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𝗖𝗢𝗥𝗣𝗢𝗥𝗔𝗧𝗘 𝗧𝗥𝗔𝗡𝗦𝗣𝗔𝗥𝗘𝗡𝗖𝗬 𝗔𝗖𝗧 𝗘𝗫𝗧𝗘𝗡𝗦𝗜𝗢𝗡 𝗦𝗧𝗔𝗧𝗘𝗠𝗘𝗡𝗧 𝗙𝗢𝗥 𝗥𝗘𝗣𝗢𝗥𝗧𝗜𝗡𝗚 𝗖𝗢𝗠𝗣𝗔𝗡𝗜𝗘𝗦 Following the December 23, 2024, federal Court of Appeals decision, reporting companies are now required to file beneficial ownership information with FinCEN. The Department of the Treasury has extended the reporting deadline as follows, recognizing the need for additional compliance time due to the earlier preliminary injunction: • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝗱 𝗼𝗿 𝗿𝗲𝗴𝗶𝘀𝘁𝗲𝗿𝗲𝗱 𝗽𝗿𝗶𝗼𝗿 𝘁𝗼 𝗝𝗮𝗻𝘂𝗮𝗿𝘆 𝟭, 𝟮𝟬𝟮𝟰: Deadline extended to January 13, 2025. • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝗱 𝗼𝗿 𝗿𝗲𝗴𝗶𝘀𝘁𝗲𝗿𝗲𝗱 𝗯𝗲𝘁𝘄𝗲𝗲𝗻 𝗦𝗲𝗽𝘁𝗲𝗺𝗯𝗲𝗿 𝟰, 𝟮𝟬𝟮𝟰, 𝗮𝗻𝗱 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟮𝟯, 𝟮𝟬𝟮𝟰: Deadline extended to January 13, 2025. • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝗱 𝗼𝗿 𝗿𝗲𝗴𝗶𝘀𝘁𝗲𝗿𝗲𝗱 𝗯𝗲𝘁𝘄𝗲𝗲𝗻 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟯, 𝟮𝟬𝟮𝟰, 𝗮𝗻𝗱 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟮𝟯, 𝟮𝟬𝟮𝟰: Additional 21 days from original filing deadline. • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗾𝘂𝗮𝗹𝗶𝗳𝘆𝗶𝗻𝗴 𝗳𝗼𝗿 𝗱𝗶𝘀𝗮𝘀𝘁𝗲𝗿 𝗿𝗲𝗹𝗶𝗲𝗳: Follow the later deadline if extended beyond January 13, 2025. • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝗱 𝗼𝗿 𝗿𝗲𝗴𝗶𝘀𝘁𝗲𝗿𝗲𝗱 𝗼𝗻 𝗼𝗿 𝗮𝗳𝘁𝗲𝗿 𝗝𝗮𝗻𝘂𝗮𝗿𝘆 𝟭, 𝟮𝟬𝟮𝟱: File within 30 days of effective creation or registration. Plaintiffs in the case of National Small Business United v. Yellen are not currently required to report. On December 3, 2024, a nationwide preliminary injunction was issued by the U.S. District Court for the Eastern District of Texas, halting CTA enforcement. On December 23, 2024, the Fifth Circuit granted a stay, allowing enforcement to proceed pending ongoing litigation. The government maintains that the CTA is constitutional, and the Department of Justice has filed an appeal. https://lnkd.in/gukG2uxZ

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𝗖𝗢𝗥𝗣𝗢𝗥𝗔𝗧𝗘 𝗧𝗥𝗔𝗡𝗦𝗣𝗔𝗥𝗘𝗡𝗖𝗬 𝗔𝗖𝗧 𝗘𝗫𝗧𝗘𝗡𝗦𝗜𝗢𝗡 𝗦𝗧𝗔𝗧𝗘𝗠𝗘𝗡𝗧 𝗙𝗢𝗥 𝗥𝗘𝗣𝗢𝗥𝗧𝗜𝗡𝗚 𝗖𝗢𝗠𝗣𝗔𝗡𝗜𝗘𝗦 Following the December 23, 2024, federal Court of Appeals decision, reporting companies are now required to file beneficial ownership information with FinCEN. The Department of the Treasury has extended the reporting deadline as follows, recognizing the need for additional compliance time due to the earlier preliminary injunction: • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝗱 𝗼𝗿 𝗿𝗲𝗴𝗶𝘀𝘁𝗲𝗿𝗲𝗱 𝗽𝗿𝗶𝗼𝗿 𝘁𝗼 𝗝𝗮𝗻𝘂𝗮𝗿𝘆 𝟭, 𝟮𝟬𝟮𝟰: Deadline extended to January 13, 2025. • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝗱 𝗼𝗿 𝗿𝗲𝗴𝗶𝘀𝘁𝗲𝗿𝗲𝗱 𝗯𝗲𝘁𝘄𝗲𝗲𝗻 𝗦𝗲𝗽𝘁𝗲𝗺𝗯𝗲𝗿 𝟰, 𝟮𝟬𝟮𝟰, 𝗮𝗻𝗱 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟮𝟯, 𝟮𝟬𝟮𝟰: Deadline extended to January 13, 2025. • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝗱 𝗼𝗿 𝗿𝗲𝗴𝗶𝘀𝘁𝗲𝗿𝗲𝗱 𝗯𝗲𝘁𝘄𝗲𝗲𝗻 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟯, 𝟮𝟬𝟮𝟰, 𝗮𝗻𝗱 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟮𝟯, 𝟮𝟬𝟮𝟰: Additional 21 days from original filing deadline. • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗾𝘂𝗮𝗹𝗶𝗳𝘆𝗶𝗻𝗴 𝗳𝗼𝗿 𝗱𝗶𝘀𝗮𝘀𝘁𝗲𝗿 𝗿𝗲𝗹𝗶𝗲𝗳: Follow the later deadline if extended beyond January 13, 2025. • 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝗱 𝗼𝗿 𝗿𝗲𝗴𝗶𝘀𝘁𝗲𝗿𝗲𝗱 𝗼𝗻 𝗼𝗿 𝗮𝗳𝘁𝗲𝗿 𝗝𝗮𝗻𝘂𝗮𝗿𝘆 𝟭, 𝟮𝟬𝟮𝟱: File within 30 days of effective creation or registration. Plaintiffs in the case of National Small Business United v. Yellen are not currently required to report. On December 3, 2024, a nationwide preliminary injunction was issued by the U.S. District Court for the Eastern District of Texas, halting CTA enforcement. On December 23, 2024, the Fifth Circuit granted a stay, allowing enforcement to proceed pending ongoing litigation. The government maintains that the CTA is constitutional, and the Department of Justice has filed an appeal. https://lnkd.in/gukG2uxZ

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Below is an informative video from FinCEN on the Corporate Transparency Act, detailing Beneficial Ownership Information Reports (BOIR). This is a must-watch for business owners, lawyers, and accountants to ensure compliance with the new reporting requirements. https://lnkd.in/g6T9zc7e

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UPDATE: The CTA saga continues. As expected, DOJ has appealed to the Fifth Circuit. Not to be overly dramatic, but nobody wins here. Tons of companies have already invested massive amounts of time and money in complying with the BOI Rule by filing their initial reports well in advance of the 1/1/25 deadline, and corporate groups that hadn't yet filed (whether because of lack of clarity about some of the absurdities of the rule, or because they have hundreds of reports to make and were still compiling the info for their reports) are now locked in a game of chicken with FinCEN/DOJ and the Fifth Circuit. * * * Big news out of Texas on the Corporate Transparency Act and FinCEN's BOI rule: "[T]he CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court." https://lnkd.in/gYWGXn56

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Today, the House Financial Services Capital Markets Subcommittee will hold a hearing examining the U.S. Securities and Exchange Commission Enforcement Division's agenda and enforcement actions. Congress must continue to establish reforms enhancing due process efforts and transparency within the Commission. "In previous Administrations, the SEC’s enforcement practices have never been partisan. Unfortunately, the same cannot be said about this SEC. From failing to protect basic due process rights of American citizens through its in-house legal process, to imposing massive corporate “taxes” for minor record keeping violations during COVID, to being sanctioned by federal judges in crypto cases, the public is now questioning the SEC’s Enforcement Division," said American Securities Association President & CEO Christopher A. Iacovella. "The trust of all market participants is necessary for the SEC’s enforcement program to be effective and credible, and we support congressional scrutiny into how this SEC has used its enforcement powers. Enacting lasting reforms to these processes, beginning with the impactful legislation at the heart of today’s hearing, is essential.” Watch below 📺:

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Client Alert: FinCEN Confirms Corporate Transparency Act (CTA) Reports are Voluntary Submission Only "In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports." Impact of Ongoing Litigation: While news of this injunction was likely received with relief, the ultimate outcome of this litigation is far from clear. Takeaway: Close Monitoring Required. Our corporate attorneys will continue to monitor this litigation and for additional guidance, please connect with our CTA team. #BusinessLaw #BusinessLitigation #BusinessDisputes #AssestProtection #TexasAttorneys

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Learn more about how small businesses are being affected by the Corporate Transparency Act's Beneficial Ownership Information Reporting requirements that went into effect earlier this year on January 1st. https://ow.ly/aFc750Syfgr #CTA #beneficialownership #compliance #business

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Covenants are conditions or restrictions set by lenders to ensure that borrowers maintain certain financial ratios, operational metrics, or other performance indicators. Covenant Monitoring Services are provided by specialized entities, often financial institutions or consulting firms, to track and assess compliance with these covenants. The role of Covenant Monitoring Services includes: Monitoring Compliance: Regularly reviewing financial statements, reports, and other relevant data to ensure that the borrower is in compliance with the specified covenants. Reporting: Providing timely and accurate reports to lenders or other stakeholders regarding the borrower's adherence to covenant requirements. Alerts and Notifications: Issuing alerts or notifications in case of any potential or actual covenant breaches, allowing for prompt corrective action. Pratapsingh Nathani Kaustubh Kulkarni Jaydeep Bhattacharya Veena Nautiyal Deepavalli Vankalu . To know more visit us https://lnkd.in/erNgX-7F . #convenants #financialratios #operational #performance #indicators #entities #financialinstitutions #compliance #stakeholders #requirements #beacontrusteeship

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Do I need to file a BOIR for my LLC? https://lnkd.in/gDheK54z Definition: A Beneficial Ownership Information Report (BOIR) is required by FinCEN to identify individuals who directly or indirectly have substantial control over a company or own at least 25% of a company. Purpose: The report aims to increase transparency and combat illicit activities like money laundering and tax evasion. Requirements: Reporting companies must file BOIRs electronically, detailing their beneficial owners' information, starting January 1, 2024. Continue reading: https://lnkd.in/gDheK54z #CTA #CorporateTransparencyAct #BOI #BOIR #AML #FinCEN #BeneficialOwnership #KYC #Business #SmallBusiness #Startup #CorporateTransparency #Business #SMB #SMBs #entrepreneurship #finance #Compliance #RegulatoryCompliance #FinancialTransparency #BOIReporting #FinCENCompliance #BeneficialOwners

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🚨 Breaking News: The BOI Reporting Deadline is Back On! 🚨 The Fifth Circuit U.S. Court of Appeals has lifted the injunction for the Corporate Transparency Act, reinstating the January 1, 2025 deadline for FinCEN Beneficial Ownership Information Reports. UPDATE: FinCEN has extended the deadline for entities formed prior to 2024 to January 13, 2024. Stay vigilant and prepare for timely filing! With only 9.5M of 32.6M required filings submitted, the stakes are higher than ever: ❗ Civil fines: Up to $591/day ❗ Criminal fines: Up to $10,000 per report ❗ Imprisonment: Up to 2 years Don’t get caught unprepared. Secure Compliance streamlines reporting with: ✅ Bulk filing capabilities ✅ Automated data collection ✅ Expert support 👉 Stay ahead with advanced technology and expert guidance. Read the full update here: https://lnkd.in/gj6-PHjr #CTA #BOI #BeneficialOwner #FinCEN #Compliance #BOIR #File #Deadline #Business #Government #SMB

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