If a fund has frequent transfers by its limited partners, it risks being classified as a publicly traded partnership. That’s a bad result because the fund then becomes taxable as a corporation, subject to a qualifying income test. You might be surprised how low the threshold is for being treated as a publicly traded partnership. … Read more »
Category: Private Investment Funds
Are Your Private Fund Employees Licensed?
I think many real estate fund managers and private equity fund managers may be concerned that there are some additional licensing requirements now that they are registered with the Securities and Exchange Commission as an investment adviser. If you didn’t require licensing with your current business model before Dodd-Frank you likely don’t require licensing post-Dodd … Read more »
Private Equity Funds in the Hot Seat
Debevoise & Plimpton LLP put on an excellent seminar focused on enforcement actions against private equity funds. Moderator: Kenneth J. Berman Speakers: Eric R. Dinallo Robert B. Kaplan Shannon Rose Selden Each fund manager is designated with a risk rating by the Securities and Exchange Commission. The Form ADV filing gives the SEC the background … Read more »
Don’t Secretly Change Your Fund Structure
New Stream Capital took the unusual step or restructuring its fund structure in secret. The restructuring put its biggest investor into a preferred position, to the disadvantage of its other investors. At least according to the complaint filed by the Securities and Exchange Commission. The SEC alleges that New Stream’s co-owners David Bryson and Bart … Read more »
California Redefines “Private Fund”
I’ve spent a great deal of brain power on the definition of “private fund” under the Investment Advisers Act. California has added its own twist on the definition. It’s a twist that is very important to real estate fund managers. Working through the definition of “private fund” requires wading through the Investment Company Act. Congress … Read more »
Preliminary Results of Dodd-Frank Act Changes to Investment Adviser Registration Requirements
The Securities and Exchange Commission has released some statistics on the effect of Dodd-Frank on the registration of investment advisers (.pdf). March 30, 2012 was the compliance date for several provisions of the Dodd-Frank Act that amended the registration provisions of the Investment Advisers Act. Registered private fund advisers advise 30,617 private funds with total … Read more »
Dawn of the Zombie Funds
The Securities and Exchange Commission has a shotgun in its hand and is looking for zombies. “We are going to take a close look at that and see whether or not there’s a problem,” said Robert Khuzami, the SEC’s enforcement director. Khuzami is the one pointing the shotgun. Many private investment funds either prevent redemptions … Read more »
Comments on Advertising Restrictions for Private Funds
Section 201 of the recently passed Jumpstart Our Business Startups Act will change the advertising limits on private funds and any other company that raises capital through the private placement safe harbor in Rule 506 of Regulation D. That rule has historically prevented the use of general solicitation and advertising in selling private fund interests. … Read more »
Private Equity Real Estate Top 30 – 2012 Edition
Private Equity Real Estate just released its ranking of the top 30 real estate private equity fund managers. As I have done in the past, I parsed the list to see which managers are registered with the Securities and Exchange Commission as investment advisers. (Disclosure: my company is on the list.) 1 The Blackstone Group … Read more »
More Private Fund Advisers Register than SEC Expected
From the great sources at IA Watch: The numbers may not be final, but they’re close. Some 1,400 private fund advisers registered with the SEC by the first week of April, sources tell IA Watch. Owing for some stragglers, these appear to be what Dodd-Frank wrought by way of new advisers. They join some 2,600 … Read more »