ASC Advisors November 2024 Newsletter
A Rise in Phishing Attacks Targeting Investment Managers
Investment firms and their management teams have been subjects of phishing attacks, with scammers impersonating employees, founders, firm social media pages and websites. Most often, these scams involve bad actors claiming to be employees or executives, offering lucrative investment opportunities to their targets or making phony stock pick recommendations, accompanied with requests to wire large sums of money.
According to The Wall Street Journal, multiple firms have found that once a fake profile or website is removed, another appears just a few days later, making reputation management a game of “Whack-A-Mole.”
At ASC, we leverage reputation management expertise to provide proactive and reactive steps to protect your brand from reputational damage that may result from these types of schemes. We also release a bi-annual social media report, complete with informed recommendations for how to manage and leverage social media platforms and prevent your brand from being compromised.
Relevant Coverage:
Rate Cuts Can Accelerate U.S. Venture Capital Activity
According to VentureBeat, global venture capital activity continued to decline in Q3. Though activity was low, there is a high volume of dry powder available to investors; Barron’s reported that PE firms and venture capital funds held a record $2.6 trillion of uncommitted capital as recently as July. The very factors that contributed to low activity, including interest rates and liquidity levels, may be the factors that improve venture interest and activity in 2025, following the Fed’s first rate cut since 2020 and projected loosening moving forward.
According to The Wall Street Journal, these actions pave the way for investors to move away from fixed-income strategies to venture commitments while simultaneously reducing borrowing costs for startups. These market factors often lead to increased liquidity, resulting in venture capital firms and individual investors allocating more funds toward high-risk, high-reward opportunities in emerging sectors like AI, biotech and clean energy.
As greater capital becomes accessible to investors, we suspect venture capital activity to increase and are working with our venture capital clients to create tailored, strategic communications plans that emphasize the opportunity set, focusing on growth potential, enhancing brand recognition and fostering relationships that may aid fundraising efforts.
Relevant Coverage:
Regulators Move Forward on AI, M&A and Investigation Publicity
While the SEC’s Private Fund Adviser Rule (PFAR) was struck down in court earlier this year, the Commission has continued to bring actions against investment advisers and firms, including continued enforcement of off-channel communications violations. With Sanjay Wadhwa taking over as acting SEC Director of Enforcement following Gurbir Grewal’s departure earlier this month, the way that ongoing and new investigations will be approached leading up to and through the election and inauguration of a new administration is yet to be determined.
With that said, given the rise of AI and interest that both the SEC and FTC have shown on how AI is being used within different industries, we expect regulators to continue to closely monitor the rapidly evolving capabilities and use of AI as they look to keep guardrails in place around any fraud or misleading claims. There have already been settlements related to claims around AI-driven trading platforms, demonstrating the continued critical importance of consistently and accurately reflecting policies, strategies and offerings when communicating to third parties.
There are a number of active proposals from the FTC and Congress that could have meaningful impacts on the private equity and M&A markets. Specifically, the FTC’s focus on rules related to premerger notification form and instructions could require private equity firms to provide deeper reporting and disclosures, including sharing information on deal structures, overlapping business relationships, and prior transactions. In Congress, Senator Elizabeth Warren and other legislators introduced the Stop Wall Street Looting Act of 2024, which would extend liabilities to buyout firms. The bill faces opposition from the private equity industry, including the American Investment Council, and is one that we are following closely as to how it proceeds and in what form.
The U.K.’s Financial Conduct Authority (FCA) will hold hearings on November 20 related to its “Name and Shame” proposal, Consultation Paper CP24/2, which it put forth in February. The proposal would publicize investigations upon initiation, presenting significant harm to value and security of their firms’ investments and ultimately hurting the very group of people that the FCA was established to protect. Given the often undeserved reputational impact announcements of this nature would have on target firms, ASC Advisors delivered a letter to Parliament raising concerns about the proposal, which you can find here.
Regulation continues to evolve at a rapid pace, and we hope to serve as a resource on how regulatory agencies’ priorities are evolving and how your organizations can adjust accordingly to safeguard investments and reputations. As advisors exclusively to investment managers, ASC follows these developments closely and we often work with clients preparing for and navigating through various regulatory regimes, investigations, settlements and enforcement actions.
Relevant Coverage:
2024 U.S. Presidential Election: Media and the Markets
As we approach election day, the media has been looking to connect with investment managers and other industry leaders for insights into how portfolios might be positioned leading up to and beyond the election. We have worked with clients to engage with top-tier reporters around potential market moves and outlooks, both on-the-record and on-background.
A main focal point of media coverage has continued to be the divergent impacts each presidential candidate's policies might have on the markets. There is expected to be uncertainty beyond election day and the final result may take several days, or even weeks, and we believe the media will continue to look for color into how investors are approaching the election’s outcome and positioning their strategies as and after the next administration is declared.
Relevant Coverage:
Firm News
Arootah and ASC Advisors Collaborate on Crisis Book
With faster media cycles, online news sources and the virality of social media platforms, having an effective crisis management strategy is now more necessary than ever.
Rich Bello, founder of Arootah, has written, with the assistance of ASC Advisors, a comprehensive guide for investment managers on preparing for and managing crisis situations effectively. Leveraging decades of collective experience working through crisis situations across the investment management industry, The Crisis Management Principles: Preparing for Crisis Situations to Safeguard Your Fund includes 10 principles to follow when faced with a crisis, which range from anticipating obstacles to navigating regulations and preparing for regulatory scrutiny.
The digital book is available to purchase at this link. Please let us know if you have any questions or would like to discuss how best to get ahead of a potential event.
ASC Outside the Office: Fishing Tournament for Conservation
ASC Partner Taylor Ingraham hosted the Seventh Annual Tightlined Slam Fishing Tournament from October 11-13 out of Norwalk, CT. A lifelong fly and light-tackle angler, Taylor founded the catch-and-release tournament to raise money and awareness for conservation of fisheries and marine resources. This year’s event, which supported the American Saltwater Guides Association, had 29 boats and approximately 100 anglers targeting striped bass, bluefish, false albacore and bonito throughout the Western Long Island Sound.
For more on the Tightlined Slam, please feel free to visit www.tightlinedslam.com, and for more on the American Saltwater Guides Association, please visit www.saltwaterguidesassociation.org.
