The Securities and Exchange Commission (SEC) is cracking down on
private fund [1] managers for not using registered
broker-dealers for fundraising. At the same time, recent public
comments by the SEC staff indicate that certain activities of
private fund managers may require that they become registered with
the SEC as broker-dealers. These recent comments also indicate a
willingness to entertain suggestions to create a useful exemption
from broker-dealer registration specific to private fund
managers.
Ranieri Partners Enforcement Action
The SEC charged Ranieri Partners LLC ("Ranieri"), a
private equity fund, with raising over $500 million in capital
commitments through a third-party consultant who was not registered
with the SEC as a broker-dealer. Under the terms of the settlement,
announced on March 8, 2013, Ranieri agreed to pay a $375,000 fine,
one of Ranieri's managing directors (who functioned as a
marketing/sales employee of Ranieri) agreed to pay a
