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Private Fund Exemptions under the Investment Company Act
Private investment funds primarily use two exemptions to avoid being defined as an “investment company” under the Investment Company Act of 1940: Section 3(c)(1) or Section 3(c)(7). Less than 100...
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Qualified Purchasers under the Investment Company Act
In a private fund exempt under 3(c)(1) investors only generally need to be accredited investors (and “qualified clients” if the fund manager is SEC registered. If you have more than 100 investors in...
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The Knowledgeable Employee Exemption for Private Funds
UPDATE: See More Guidance on Knowledgeable Employee Exemption for Private Funds When operating under the Section 3(c)(7) exemption from the Investment Company Act, the issue then becomes how a private...
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Are you an Investment Company?
Fund managers are dealing with Dodd-Frank and the requirements under the Investment Advisers Act made by the Securities and Exchange Commission. Of course, a fund manager needs to focus on other areas...
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Real Estate Funds and the Investment Company Act
Traditionally, private fund managers have looked at the section 3(c)(1) or section 3(c)(7) exemptions from the definition of “investment company” to avoid the restrictions of being regulated under the...
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Failure to Adequately Oversee Service Providers
Citing what it called “wholly inadequate” oversight of a faraway subadviser, the Securities and Exchange Commission fined and ordered repayment of advisory fees by Morgan Stanley Investment...
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Is Apple a Hedge Fund?
I don’t own any Apple stock, but their announcement about what they’re planning to do with their big stockpile of cash caught my attention. Not because I’m going to rush out and buy the stock, but...
View ArticleMore Insight on 3(c)5
Dodd-Frank created a new legal definition for a “private fund” as pooled investment vehicles that are excluded from the definition of “investment company” under the Investment Company Act of 1940 by...
View ArticleIs Your Real Estate Fund Invested in Real Estate?
One of the challenges with real estate funds is staying within the various requirements of a real estate fund at the beginning of its life and at the end of its life. At start-up, the fund may be...
View ArticleIndividuals as Qualified Purchasers
To pull the pieces together, private funds are exempt from the Investment Company Act under Section 3(c)(1) or Section 3(c)(7). Under (1) the fund is limited to 100 investors. Under (7), there is no...
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