Regulatory Change: 2015 Diagnosis, 2016 Prognosis

In recent years, securities regulation has become a leviathan, riddled with traps for the unwary that can lead to arbitrary, disproportionate and perverse sanctions. Elsewhere, the lack of clearly defined rules creates uncertainty over areas such as determining investor collusion or defining bribery. In this article, The Hedge Fund Journal profiles SRZ’s leading securities litigation practice and talks to SRZ partners Eric A. Bensky, Brian T. Daly, Harry S. Davis, William H. Gussman, Jr., David K. Momborquette, Howard Schiffman, Gary Stein and Michael E. Swartz about key securities regulatory enforcement and civil litigation issues affecting the private investment fund industry as well as what to expect in 2016. The attorneys discuss the impact of the seminal Newman decision on insider trading law (including important limitations on the applicability of Newman), collaboration between U.S. and foreign securities regulators, market manipulation cases (including “spoofing” and other actions involving high frequency traders), liability of chief compliance officers and other “gate keepers,” activist investors, antitrust disclosure issues, fines and prime broker liability, compliance with Rule 105 under Regulation M (which relates to short selling in advance of certain secondary offerings), civil litigation relating to appraisal statutes, and the increasing interrelationship between SEC examinations, regulatory investigations and enforcement actions, among other topics.