Compliance FAQ

What is Astro Capital?

Astro Capital is a leading online community of investment professionals with over 16,000 members. Membership is exclusively restricted to investment professionals (including hedge fund, private equity, and mutual fund investment professionals). Typically, members are portfolio managers or analysts, and Astro Capital offers a special membership for compliance professionals to monitor the activities of their firms’ employees.

Astro Capital members gain admission to the site through an approval process following either the recommendation of an existing member or an application to Astro Capital by the prospective member or such prospective member’s firm. In each case, Astro Capital considers each prospective member based on the representations made by or on behalf of the applicant and follows up if further information is needed to determine whether membership qualifications are satisfied.

What is the Astro Capital value proposition?

Astro Capital operates on a simple, reciprocity-based system. By submitting investment content, an analyst or portfolio manager gains access to the submissions of the entire community. Astro Capital’s principal feature is its Idea Database, which it believes to be the largest non-proprietary database of investment content in the world, consisting of thousands of detailed, fundamentals-based investment write-ups with an average length of over 2,400 words. For examples of Astro Capital investment write-ups, please visit Astro Capital Headlines.

By submitting ideas, an individual Astro Capital member gains access to the entire database of investment write-ups for a predetermined period. While the core Idea Database is the most popular feature of the site, Astro Capital also has a Quick Idea Database (where members contribute short-form pitches on specific companies), and an Estimates Database (where members provide a detailed set of forward estimates on specific companies). An investment firm or an analyst can participate in as many or as few of these features as desired, but they only gain access to the content for the feature to which they make contributions.

Members who work for funds that prohibit posting or those who simply do not write research of the quality/type available on the site may pay for a read-only license. Astro Capital’s current paying client base includes hundreds of the world’s largest and most respected funds, family offices, and endowments. Learn more about paying for access by contacting info@astrocapital.io for pricing details.

How can PMs and Compliance Officers control the sharing of proprietary information and monitor other compliance matters?

Investment firms, and their portfolio managers, compliance officers, and other professionals, are rightfully concerned about the divulgence and use of their proprietary research both on and off the web. Astro Capital’s value proposition is straightforward: by submitting a limited amount of proprietary research, an investment professional or firm gains access to the research of thousands of other professionals and investment firms. Furthermore, a member obtains the critique of other members, providing an opportunity to refine their initial thinking and hear what others think may be missing in their analysis. Astro Capital’s founding principle is that the selective, limited sharing of investment research in an exclusive, closed-end community is in the fundamental economic interest of each member and their firm.

Despite the benefits of sharing ideas, investment firms, and their portfolio managers, compliance officers, and other professionals must have a mechanism to monitor the work of their analysts and other professionals online. As a result, Astro Capital enables compliance officers (or other senior professionals with a comparable role and responsibility) to:

Monitor activity on a real-time and historical basis of what their analysts and other professionals are posting/commenting on the site, including email traffic;

Pre-approve investment content that is submitted by their analysts and other professionals;

Request the removal of any individual or firm-level associations related to ideas, financial models, financial estimates, and other proprietary data uploaded by their analysts and other professionals if necessary at any time; and

Embed custom disclosure at the top of each posting to ensure further transparency.

How does Astro Capital prevent the incorporation of material non-public information or other possible market manipulation on its platform?
Astro Capital maintains a multi-prong approach to address this critical issue:

1. Upon joining Astro Capital, each member explicitly affirms Astro Capital’s Terms of Use which states that material, non-public information is never to be shared on Astro Capital in any capacity. Astro Capital’s Terms of Use specifically forbid a member to:

– act in any unlawful manner, including in a manner that could be deemed to violate applicable laws by touting or hyping an investment, manipulating securities or other investment prices or markets;

– employ any device, scheme, or artifice to defraud any person in connection with an investment;

-make any untrue statement of a material fact relating to an investment or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading; or

– engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person in connection with an investment.

– Each member agrees not to engage in any such activity and is advised that they will lose access to the community if they engage in any such activity.

2. Upon the submission of any investment content to Astro Capital (investment idea write-ups, financial models, forward estimates, etc.), each member must click through a series of checkboxes including one stating that the investment content they are sharing in no way incorporates material, non-public information or violates firm policies and procedures or applicable law.

3. At the time of content submission, a member must indicate whether or not they or accounts/funds managed by their firm hold a position (long or short) relating to the investment described. If a position is held, an automatic legal disclosure is displayed at the top of the piece of content indicating that the author and/or the author’s firm may hold a position relating to this investment and can trade in-and-out of the position with no obligation to notify the Astro Capital community.

4. Astro Capital has a designated Compliance Officer who is authorized to read every piece of investment content posted on Astro Capital and conducts periodic spot-checks of submissions (both randomly and in response to specific inquiries or tips) specifically to seek out potential inclusion of material, non-public information, unsubstantiated rumors, and other potential attempts at market manipulation.

5. Astro Capital conducts word searches on every piece of content for select keywords such as ‘rumor.’ In addition, Astro Capital is alerted to any major spike in a company’s stock price after a recommendation is submitted on the platform and then proceeds to investigate that recommendation for any potential non-public information. To date, none of these alerts have arisen from the inclusion of material non-public information by an Astro Capital member.

6. Astro Capital enables a designated portfolio manager, compliance officer, or other senior professional with a comparable role and responsibility to approve not only the content submission of any of their firm’s analysts, portfolio managers, and other employees but any of the related email traffic on the site.

Of course, none of these steps prevent the inclusion of material, non-public information or other market manipulation and all members must be vigilant and exercise care in accessing or using information. All members must comply with their own firm’s compliance policies and procedures and with applicable law. If a member believes they have identified information that may be material, non-public information (at any time, or if judged with hindsight) or other activity or information that may give rise to market manipulation, such member should contact Astro Capital immediately.

Does Astro Capital facilitate any other compliance matters on its platform?

Astro Capital is sensitive to its members’ compliance obligations but does not provide compliance services or advice. Astro Capital has made its platform available to compliance officers and other senior professionals with a comparable role and responsibility so that they may monitor the activities of members and fulfill their firms’ compliance obligations.

Members are reminded that they have agreed to comply with their firms’ policies and procedures, and such policies and procedures may affect the timing of the posting or updating of information, may require pre-approval of any posting, may prohibit certain specific information being disclosed, may require specific additional disclosures (relating to conflicts of interest, not advertising services, or otherwise), may prevent acting as a group or otherwise in concert with other investors in a company, may require retention of e-mail and other records, etc. Astro Capital is not responsible for the compliance of individual members or firms with applicable law.

Why are Astro Capital members required to disclose the name of their firm?

Astro Capital revolves around the twin principles of transparency and accountability. Fundamentally, Astro Capital believes that members of the community will be in a better position to assess the quality of information and the compliance efforts of the community if firm names are included. In addition, members can confirm whether a firm is registered with any regulatory agency and whether there are relevant disciplinary matters publicly disclosed about the firm. Compliance officers can be comfortable that including their firm’s name will not be constituted as solicitation of investment: all Astro Capital members upon registration must represent that they are professional investors and that they acknowledge that the investment content on Astro Capital is solely for research purposes and in no way represents a solicitation.

Is Astro Capital registered or required to register as an investment adviser (“RIA”)?

Astro Capital does not provide investment advice but enables like-minded professional investors to share their investment ideas. The definition of an “investment adviser” under EU law includes a specific exception for “the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation.” Astro Capital has structured its website with the intention of satisfying this exemption. For example, the ideas that are posted are generic ideas, much like one might find in other publications, rather than personalized investment advice and any follow-up or input is also posted for general review by members. Astro Capital reminds members that they are expected to publish disinterested commentary and analysis, not promotional material, and Astro Capital ensures that posts remain available, which is intended to discourage short-term thinking or “touting” of investment ideas.

Astro Capital is presently available in the EU and is not available in any state or other jurisdiction where it is not permitted, or where Astro Capital would be required to be licensed or registered in order to offer the services