The Dodd-Frank Wall Street Reform and Consumer Protection Act wiped out the exemption enjoyed by most private funds. I’m still waiting to see how the SEC will define a “venture capital fund manager.” In the meantime, the SEC has published its proposed rule defining a “family office” and its exemption from registration under the Investment … Read more »
Category: Private Investment Funds
Revoking a Subscription Agreement
Private equity funds investors sign a subscription agreement, promising to deliver cash when the fund makes a capital call. In a recent Delaware case, investors sought to revoke their subscription agreements and recover their capital contribution. They were investors in a Lehman Brothers sponsored investment fund. In 2007 the three plaintiffs became limited partners in … Read more »
Europe’s Approach to Derivatives Regulation
With this summer’s passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, it’s Europe’s turn to address financial regulation. This morning, the European Commission released its Proposal for Regulation on OTC Derivatives, central counterparties and trade repositories. The proposal seems to look a lot like the Dodd-Frank’s approach by creating a central trade … Read more »
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 »