Defining “Qualified Client” – Uff Da!
Corporations Code Section 25234 generally prohibits an investment adviser registered in California to be compensated on the basis of a share of capital gains. This prohibition is analogous to the prohibition found in Section 205(a)(1) of the Investment Advisers Act of 1940 (IAA). Congress included this prohibition because it was believed that performance fees might induce advisers in search or higher Read more...
Commissioner Proposes Successor To Rule 260.204.9
With the enactment of the National Securities Markets Improvement Act of 1996, Congress divided registration authority over investment advisers between the Securities and Exchange Commission and state securities regulators. In general, large advisers (i.e., those with at least $25 million in assets under management) were required to register with the SEC and smaller advisers were subject to state registration. Fund advisers, however, Read more...
Truth Endures For All Generations And Perhaps So Can A Family Office
Many rich people establish “family offices” to provide investment advisory services to family members. Section 409 of the Dodd-Frank Act excludes “family offices” from the definition of ”investment adviser” under the Investment Advisers Act of 1940. Congress left it up to the Securities and Exchange Commission to define who is and who isn’t family for purposes of the family office exclusion. SEC Defines “Family Members” Under Read more...
California Gets Ready For SEC Hand-off of Midsized Advisory Firms
Department of Corporations Letter To Midsized Firms If you are an SEC registered investment adviser with assets under management of between $25 million and $100 million, you should check your mailbox for this October 7 letter from Commissioner Preston Dufauchard. The Commissioner is sending this letter to those firms that are likely to be required to transition to state registration under the Read more...
SEC Slays Redwoods At Fearsome Pace
Yesterday, was a big day for both the regulated and the unregulated adviser industry. “The very rich are different from you and me . . . they have more money” The Securities and Exchange Commission adopted its final “family office” rules. According to the SEC, “family offices” are established by wealthy families to manage their riches, plan for the future and Read more...
Commissioner Takes Emergency Action To Put More Time On The Clock For Rule 260.204.9
Yesterday, Commissioner Preston DuFauchard started the process for adding six months to the lifespan of Rule 260.204.9. The Commissioner took this action in light of the imminent expiration of the “private adviser” exemption set forth in Section 203(b)(3) of the Investment Advisers Act of 1940. The Dodd-Frank Act eliminates this exemption effective July 21, 2011. SEC To Adopt Final Invest Adviser Act Rules The Securities Read more...
Commissioner To Ask For Comments On Rule 260.204.9
Look for the Commissioner of Corporations to be issuing a solicitation for comments on proposed changes to Rule 260.204.9. As will be discussed in a Guest Blog to be posted on Monday, the Commissioner has announced that he is considering changes to Rule 260.204.9 in light of the enactment of the Dodd-Frank Act last summer. Currently, many private fund managers (including Read more...
Defining “Venture Capital Fund” Is “No Small Task”
Today, the Securities and Exchange Commission proposed a definition of “venture capital fund” for purposes of the new exemption from investment adviser registration under the Investment Advisers Act of 1940. This new exemption was created by Section 407 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Congress gave the SEC one year to issue final rules defining “venture capital Read more...
Must A Fund’s General Partner Be Registered?
The typical responsibilities of a general partner of an investment limited partnership are to handle the business and administrative aspects of the fund. In return, the general partner is compensated – often, based on a percentage of the assets under management. This structure, of course, creates the question whether the general partner must be registered as an investment adviser. In Read more...
What is a Venture Capital Fund?
Section 407 of the Dodd-Frank Wall Street Reform and Consumer Protection Act creates a new exemption from federal registration for investment advisers if all their investment advice is limited to one or more “venture capital funds”. Congress, however, did not say what a “venture capital fund” was. Rather, Congress told the Securities and Exchange Commission to define the term and Read more...
