A Private Placement Memorandum, or “PPM,” is a disclosure document often used in connection with a private offering of securities. It contains a compilation of information about the company issuing the securities, the terms of the securities, and the risks of investing in those securities. This article explains the legal background underlying why a PPM is commonly used and overviews what is typically included in a PPM.
Private Equity and Hedge Funds
SEC Updates Definition of Accredited Investor

On August 26, 2020, the Securities and Exchange Commission (“SEC”) issued a press release indicating that it had adopted amendments to the definition of “accredited investor.” The amendments, among other things, added to the list of individuals who qualify as accredited investors, holders in good standing of a Series 7, Series 65, or Series 82 license. The amendments also updated the definition of accredited investor to include, with respect to investments in private funds, natural persons who are “knowledgeable employees” as defined in Rule 3c(5)(a)(4) of the Investment Company Act of 1940. This change could prove significant for private funds with under $5 million is assets under management which wish to allow certain employees to participate in the private fund’s offering.
[Read more…]Handling Trade Errors: Best Practices for Private Fund Advisers

New investment advisers are typically focused on creating marketable investment programs and raising capital. Legal matters are often delegated to outside counsel and the adviser’s investment in operations, staffing and compliance is often kept at a minimum to start. While this strategy may make sense on a budgetary level, new advisers need to devote some attention to inevitable operational issues in order to minimize their cost and disruption. At the top of this list is the issue of trade errors.
[Read more…]The Different Meanings of the Word “Registration” for Private Funds

One of the first questions that new private fund advisers often ask me is whether they will need to “register” with the SEC. They are often thinking in terms of registration as an investment adviser. However, even if a fund adviser is exempt from registration as an investment adviser with the SEC, he or she also needs to understand the impact of other federal securities laws, such as the Securities Act of 1933 and the Investment Company Act of 1940, as well as the impact of state securities laws, including state investment adviser registration requirements. I often hear new fund advisers say that they intend to rely on a particular exemption from one law and assume this exemption applies across the board to all securities laws. This post will explore the different statutes and regulations that govern private fund advisers and the registration exemptions which are usually relied upon.
[Read more…]The Venture Capital Adviser Exemption Explained
Section 203(l) of the Investment Advisers Act of 1940 (the “Advisers Act”), also known as the venture capital adviser exemption, provides that an investment adviser that solely advises venture capital funds is exempt from registration with the SEC under the Advisers Act. The term “venture capital fund” is not defined in the text of the Advisers Act; instead, the term is defined in SEC Rule 203(l)-1(a) as a private fund that meets certain conditions. This article looks at each of these conditions and explains what is needed to meet them. [Read more…]