The definition of a broker-dealer is very broad and can include managers that solicit investors to invest in a fund.Īs an example of the changing law in this area, on Aug. Federal and state securities laws require persons who are broker-dealers to register and become members of FINRA. The law in this area is of significant focus for the SEC, especially as it relates to managers raising capital on behalf of funds. A venture capital fund would be considered one client as long as the adviser provides investment advice to the fund only (not the individual members/investors of the fund). #Venture capital fund registration#In general, most states have an exemption from state-level registration for advisers that advise fewer than five clients. Instead, they must file only the first part of Form ADV as an exempt reporting adviser.Įven if not registering with the SEC as a result of an exemption, an adviser may still be required to register as an investment adviser in the state where the adviser has its principal office and place of business. Under the Advisers Act, investment advisers with “assets under management” (AUM) of under $150mm are not required to fully register with the SEC. Thus, venture capital managers must follow these guidelines if they wish to avoid registration with the SEC as an investment adviser.Ĭertain venture capital managers prefer to utilize strategies that, for example, provide some liquidity to their investors, and thus may utilize the “private fund” exemption from registration under the Advisers Act, rather than the “venture capital” exemption.
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