Private Investment Funds
Dealing with Losses From the Madoff Fraud
One of the many repercussions of the Madoff fraud is how to treat investors who had money in his Ponzi scheme. There has been plenty written about how the trustee is treating the direct investors. He is only treating net cash. If you took out more cash than you put in, you are on the… » Read More
The First Attack on the Accredited Investor Standard
Many of the provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act merely provide for future regulatory framework. That it is in part true for the changing definition of “accredited investor” under the Securities Act. The other part is that the definition changed once President Obama signed the bill into law ten days… » Read More
The Changing Standard for an Accredited Investor
As financial reform has made its way through Congress there have been several proposed changes to the standard of what it takes to be an accredited investor. In 1982, the SEC prescribed the standard in Rule 501 of Regulation D: 5. Any natural person whose individual net worth, or joint net worth with that person’s… » Read More
Chief Compliance Officers and Private Investment Funds
If you are running a private investment fund, do you need a chief compliance officer? If you are not registered with the SEC, it’s a gray area. If you are registered with SEC, then “yes.” Rule 206(4)-7 requires a registered investment adviser to “[d]esignate an individual (who is a supervised person) responsible for administering the… » Read More
Private Investment Funds and Reporting Requirements Under the Ethics Code Rule
As I wrote about yesterday on the code of ethics for an investment adviser, one of the requirements of registering with SEC as an investment adviser is implementing a code of ethics. The most involved part of the code is the extensive reporting requirement on securities activities to the chief compliance officer. Rule 204A-1 under… » Read More
It Will be up to the SEC to Define Venture Capital
With the financial reform bill set to eliminate the 15 client rule exemption for registration under the Investment Advisers Act, the only remaining exemption for fund companies with over $150 million in assets under management will be for venture capital. The Congressional conference decided to not include the Senate’s exemption for private equity. The bill… » Read More
Private Equity and the Custody Rule
With the impending removal of the 15 Client Rule exemption from registration with the SEC, I was scratching my head trying to figure how to make the SEC’s new custody rule work for private equity. The SEC recently updated its guidance on custody rule compliance truing to add clarity for advisers to pooled investment vehicles…. » Read More
Private Fund Manager Registration Status
Shearman & Sterling put together a great client publication on private fund manager registration requirements being considered by Congress: Private Fund Manager Registration as U.S. Financial Reform Legislation Approaches the Finish Line. Among the many provisions to be reconciled in the 1,600+ pages of each bill are those that would require private fund managers to… » Read More
Dodd Bill, Private Placements and Accredited Investors
I previously wrote about how the Restoring American Financial Stability Act being tossed around in the Senate could affect private investment funds by changing the definition of accredited investor and altering the process for a Regulation D private placement. It looks like much of that is going to be wiped out of the bill. Senate… » Read More
Private Investment Funds and Form 5500 Schedule C
If you have ERISA plan investors in your private investment fund you should know that they have new reporting requirements this year. There is a new rule that requires greatly expanded disclosure of monetary and non-monetary compensation paid by the ERISA plan. On Schedule C to Form 5500, the plan will need to identify any… » Read More
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Compliance Building is published by Doug Cornelius, focusing on compliance and ethical issues for private equity real estate companies. Read more in About.
