Strictly Business

A Business Law Blog for Entrepreneurs, Startups, Venture Capital, and the Private Fund Industry.

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The Different Meanings of the Word “Registration” for Private Funds

January 31, 2019 by Alexander J. Davie

securities laws

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.

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Filed Under: Private Equity and Hedge Funds Tagged With: Investment Adviser, Investment Company Act, PF Recent, Private Funds, Recent, SEC

3(c)(1) Funds vs. 3(c)(7) Funds

September 21, 2017 by Alexander J. Davie

3(c)(1) fund vs 3(c)(7) fundThe process of starting a new hedge fund or private equity fund involves choosing whether the fund will be structured as a “3(c)(1) fund” or a “3(c)(7) fund.” Many new fund managers are confused by the difference between the two, which refer to two different exemptions from the requirements imposed on “investment companies” under the Investment Company Act of 1940 (the “Act”). [Read more…]

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Filed Under: Private Equity and Hedge Funds Tagged With: 3(c)(1), 3(c)(7), Investment Company Act, PF Recent, Private Funds, Recent

Managing Conflicts of Interest in Private Equity and Venture Capital Funds

May 24, 2017 by Alexander J. Davie

illustration of private equity fundsSince the Securities and Exchange Commission has recently taken an increasingly closer look at the activities of private equity and venture capital fund managers, it is more important than ever for fund managers to understand when conflicts of interest are likely to arise and how to manage them properly. The SEC has expressed concern about conflicts of interest inherent in the private equity business model and has brought several enforcement actions against private equity fund managers in the last couple of years that mostly focus on direct and indirect compensation to managers or advisers that were not properly disclosed to the fund’s investors. Since the SEC takes the position that fund managers and advisers owe a fiduciary duty of loyalty to act in the fund’s best interest, fund managers must keep a close eye on potential conflicts of interest and employ best practices like consulting advisory committees whenever possible conflicts arise. [Read more…]

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Filed Under: Private Equity and Hedge Funds Tagged With: Conflicts of Interest, PF Recent, Private Equity, Private Funds, Recent, Venture Capital

About the editor

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Strictly Business is a business law blog for entrepreneurs, startups, venture capital, and the private fund industry. Its editor is Alexander J. Davie, an attorney at Riggs Davie PLC based in Nashville, Tennessee. His practice focuses on corporate, securities, and business law. He works mainly with technology companies, including startups and emerging companies, and private equity, venture capital, and hedge funds.
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