Category: Exempt Investment Companies

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The Financial Choice Act Aims to Help Angel Investors

The proper treatment of angel investing groups under the Federal securities laws can be a vexing question. If it were appropriate to describe the angel investing group as a “company” as defined in Section 2(a)(8) of the Investment Company Act of 1940, and if the “company” were appropriately viewed as issuing interests or shares, then … Continue Reading

Update for September 1 Fund Subscriptions: New “Qualified Client” Standard

Effective August 15, 2016 for SEC-registered investment advisers, most funds or separate accounts that are subject to a performance fee or allocation need to raise their “qualified client” net worth threshold for new investors, new investments from existing investors, or new separate account agreements, from $2 million to $2.1 million.  Other thresholds (such as the … Continue Reading

More Sanctions from Private Equity Fees: W.L. Ross

Shortly after my post on the SEC’s recent settlement with Apollo Global Management went up, the SEC released a settlement with another private equity fund manager: W.L. Ross & Co. LLC (“WLR”). Like the Apollo case, the SEC sanctioned WLR for failing to fully disclose how it was collecting its fees. But WLR paid a … Continue Reading

Section 4(c) of the 1933 Act: The Orphan Exception from Broker-Dealer Registration – Part Two

My first post discussed the requirements for the Section 4(c) exemption from broker-dealer registration added by the JOBS Act. This second part will apply Section 4(c) of the Securities Act of 1933 to a number of situations where questions can be raised whether the activities require registration as a broker-dealer.… Continue Reading

Section 4(c) of the 1933 Act: The Orphan Exception from Broker-Dealer Registration – Part One

We have previously discussed the long-running saga regarding whether transaction-based compensation related to non-public sales of securities require registration as a broker-dealer under the Securities and Exchange Act of 1934 (“Exchange Act”). Our discussions have included (i) the tricks and treats of the SEC’s Crowdfunding release last Halloween, (ii) California’s exemption for “finders,” and (iii) a Christmas present for resellers … Continue Reading

Two Regulatory Implications of the SEC’s Crowdfunding Release

On October 30th, the SEC adopted their Crowdfunding rules and the adopting release became available on October 31st, commonly referred to as Halloween.  There are two interesting regulatory decisions in that 686 page release, both of which could be described with one or the other of the customary child’s cautionary warning when you answer your front … Continue Reading

Investing in Private Funds: Conflicting Definitions of “Family”

Family Offices frequently acquire interests in private funds as part of the family office asset allocation process. Private funds have to be certain of the validity of their ability to rely on an exclusion from the definition of “investment company.” The Family Office Rule under the Investment Advisers Act has a detailed definition of “family member” … Continue Reading
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