Tax and Business Related Considerations for Private Equity and Other Investment Funds - PowerPoint PPT Presentation

1 / 93
About This Presentation

Tax and Business Related Considerations for Private Equity and Other Investment Funds


No reporting obligations or tax payment obligations in non-US jurisdictions ... David W. Blass, Chief Counsel, Division of Trading and Markets, – PowerPoint PPT presentation

Number of Views:1247
Avg rating:3.0/5.0
Slides: 94
Provided by: chamb91


Transcript and Presenter's Notes

Title: Tax and Business Related Considerations for Private Equity and Other Investment Funds

Tax and Business Related Considerations for
Private Equity and Other Investment Funds
  • Jonathan W. DePriest
  • Chamberlain, Hrdlicka, White, Williams Aughtry
  • Tax Executive Institute Denver Chapter
  • Federal Tax Day December 10, 2013

Basic Structures PE Funds
  • Structure of the PE fund itself will depend upon
    the nature of its investors
  • US domestic taxable
  • US domestic tax-exempt
  • Foreign (and from which jurisdictions)
  • AND the nature of its target (investee) portfolio
  • Foreign/Non-US
  • Domestic C Corporation
  • Domestic Partnership

Basic Structures for PE Funds
Principals/ Individuals
Non-U.S. Investors
Certain Non-U.S. Investors, and U.S. Investors
Manager Partnership or S Corporation
Management G.P.
Feeder Corporation (Non-U.S.)
x and carried interest
Fee for management services
Target Investments
Basic Structures for PE Funds
  • Investor Tax Issues
  • Non-US Investors
  • Avoid ECI
  • Avoid FIRPTA
  • Avoid filing US returns
  • Results often in using a foreign blocker
    usually organized in a tax haven jurisdiction
  • Parallel and co-investment structures often

Basic Structures for PE Funds
  • Investor Tax Issues Continued
  • US domestic taxable investors
  • PE fund itself should not bear tax
  • Pass-through of capital gains and losses
  • Minimization of phantom income
  • No reporting obligations or tax payment
    obligations in non-US jurisdictions (or if
    incurred, ability to use foreign tax credit)
  • Avoid investing in CFCs (parallel foreign
    partnership structure for non-US investments)

Basic Structures for PE Funds
  • Investor Tax Issues Continued
  • US domestic tax-exempt investors
  • Avoid investments in operating partnerships
  • Avoid unrelated debt-financed income (UDFI)
  • Avoid fees for services (UBTI)
  • Avoid certain insurance income

Basic Structures for PE Funds
  • Use of Swaps
  • Blocker companies interpose additional level of
  • Use of total return swap (TRS)
  • Investor puts up cash collateral for a notional
    investment, and typically pays interest on the
    notional amount (sometimes net of collateral)
  • Institutional counterparty will hedge with
    investment notional amount in PE fund
  • Desire for full collateralization risks

Basic Structures for PE Funds
  • Use of Swaps Continued
  • Industry Director Directive (IDD) on use of TRS
    by foreign investors
  • Avoids 30 withholding tax
  • Likely too risky
  • Use of TRS by US TEIs
  • Fairly common for private funds of MLPs
  • Applicable to PE funds

Basic Structures for PE Funds
  • Management Fees and Carried Interests
  • Limited partnership to receive management fees
    1 LLC general partner subject to self-employment
    tax, limited partnership exception under Section
    1402(a)(13) for LP share
  • Investment entity to invest the managers capital
    commitment and receive carried interest,
    exceptions for self-employment tax under Section
    1402(a)(2) and (3)

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Corporate is more traditional, and frankly
    presents fewer issues
  • Investment by PE Fund in US domestic C
    corporation often takes the form of preferred
  • Possible combination with debt

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Typical features of Preferred Stock
  • Dividends
  • Liquidation Preference
  • Redemption Rights
  • Conversion rights and related anti-dilution

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Preferred Stock Dividends
  • Cash
  • Payment-in-kind (PIK)
  • Cumulative or Compounding
  • When as and if declared by the Board will
    generally mean taxable upon receipt
  • Automatic increase to the liquidation preference
    generally means taxable as they accrue

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Preferred Stock Dividends
  • Treatment of Preferred Stock as tax common by
    adding participating features
  • Double dip participation in dividends with
    common on as-if converted basis
  • Participation on liquidation of the greater of
    liquidation preference or what holder would be
    entitled to receive on as-if converted basis

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Tax Common
  • Allows deferral of tax on PIK dividend
  • Avoids OID issues with redemption premium

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Traditional LTEIPs are more easily accomplished
  • Most are familiar with qualified stock options
  • PE views on vesting, forfeiture, Liquidity Events
  • Sale of company vs. IPO

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Partnership is more and more prevalent among
    operating companies and their owners, and from
    the private equity funds perspective presents
    conflicts among
  • U.S. domestic taxable investors
  • U.S. tax-exempt investors
  • Foreign investors

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Debt Contingent Interest
  • Expressed as the greater of a fixed percentage
    interest rate or contingent interest
  • Contingent interest expressed as a percentage of
    adjusted gross revenue
  • Not unlike the NPI discussed below
  • UBIT Avoidance for TEIs

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Preferred Equity in a Partnership
  • Allocations of taxable income to support
    preferred return upon liquidation (liquidation is
    in accordance with capital accounts)
  • Works well if income is growing
  • Capital accounts must be reflective of the
    relative rights and preferences upon liquidation
  • Getting through the waterfall

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Can lead to unexpected results and incentives
  • Amortization of goodwill for acquisitions
  • Smaller, one-off acquisitions
  • Sale of Personal Goodwill
  • Sale of Option
  • Risk of Recharacterization
  • Payment for Non-Compete vs. Compensation
  • Management vs. Investor Perspectives on
  • PE investors must mark their portfolios and
    EBITDA will be critical

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • Management LTEIP Structures
  • Grants of Partnership Interests
  • Options Plans
  • Profits Interests
  • Bonus plans
  • Management Challenges Relating to All of the
  • Valuation, rebooking and phantom Income issues
  • Earnings hits for EBITDA consider GAAP and tax
  • Survivor mentality for who is actually there
    for a Liquidity Event

Corporate vs. Partnership Structures for Target
(Investee) Portfolio Companies held by PE Funds
  • State and Local Tax (SALT) Issues in Partnerships
  • Depending upon nature of investments, state tax
    filings could be triggered in multiple
  • Multiple flow-through portfolio companies in
    multiple jurisdictions
  • Even for de minimis amounts, penalties can be
    significant and lead you to file the analysis
    must be undertaken

Real Assets Oil Gas Working Interests
  • Net Profits Interest Conveyance
  • Fund for Domestic Taxable Investors acquires a
    Working Interest
  • Such Fund conveys Net Profits Interest in the
    Working Interest to a parallel fund for TEIs to
    allow them to invest without generating UBTI
  • NPI must relate to real estate
  • TEI Fund lends taxable fund cash sufficient to
    finance tangible personal ppty

Real Assets Oil Gas Working Interests
  • Accounting and Expense Allocation Issues
  • Administrative Issues, including multiple closes
    and potential need for revaluation
  • Use of NPI Calculation Agent
  • Cannot add or pull out properties within an NPI
    conveyance after it is constituted
  • PLP Structure to Accommodate Financing for TEI
  • Making Taxable and Tax-Exempt Funds Economically

Real Assets Oil Gas Working Interests
  • Acquisitions Financing Structure

Energy Fund GP, L.P.
Lender 2
Lender 1
Tax-Exempt Investors
Taxable Investors
Energy Fund II-A, L.P.
Energy Fund II-B, L.P.
Real Assets Timber
  • TIMOs Timber Investment Management Organization
  • Actual silvicultural management, timber cruises,
    etc. handled by the TIMO
  • Some infrastructure and staffing to evaluate HBU

Real Assets Timber
  • 631(a) vs. 631(b) cutting contracts
  • Wood supply agreements are one of two types,
    delivered log contracts under Section 631(a) of
    the Codethe owner harvests the timber and sells
    the cut logsand pay-as cut or lump sum contracts
    under Section 631(b) of the Codethe purchaser
    harvests the timber and pays for what has been
    cut and the owner has a retained economic
    interest in the timber, or the owner sells
    standing timber outright for a lump sum.

Real Assets Timber
  • 631(b) cutting contracts pay as cut or lump
    sum contracts produce income which is passive
    income under Section 512(b) and not UBTI in the
    hands of tax-exempt investors

Real Assets Timber
  • HBU Sales care to avoid treatment as a dealer
    to avoid generating UBTI and preserve LTCGs
  • Partnership agreement provisions confirming
    investment purpose
  • Use of SPVs for various holdings, tracking time
    and efforts for HBU sale to show minimal nature

Real Assets TimberHBU Sales
  • Various factors considered, with frequency and
    substantiality of sales being most important
  • Nature and purpose of acquisition of ppty and
    duration of ownership
  • Nature and extent of taxpayers efforts to sell
  • Number, extent, continuity and substantiality of
    the sales
  • Extent of subdividing, developing and advertising
    to increase sales
  • Use of business office for sales
  • Time and effort habitually devoted to sales

Real Assets Other
  • Financial distress in municipalities
  • Focus on key infrastructure assets
  • Good match for large state pension funds
  • Airports
  • Railways
  • Toll Roads (mixed bag)
  • Professional management
  • Political challenges vs. economic reality

ERISA Considerations
  • VCOC- by taking an active role in the management
    of portfolio companies, PE funds may rely on an
    exemption from ERISA for venture capital
    operating companies
  • At least 50 of assets must be invested in
    venture capital investments
  • Must exercise management rights with respect to
    one or more of the operating companies in which
    it invests

ERISA Considerations
  • REOC
  • Real estate funds seek to rely on an exclusion
    from ERISA for real estate operating companies
  • Must invest at least 50 of assets in real estate
    that is managed or developed and for which the
    fund has the right to substantially participate
    in the management or development activities
  • Delegation is possible, so long as the fund has
    the right to terminate at will and actually

ERISA Considerations
  • Section 408(b)(2) Regulation 2550.408b-2(c)
    requiring covered Service Providers to make
    specified periodic disclosures to covered plans,
    mainly around compensation arrangements

ERISA Considerations
  • Significant Participation Test
  • A private fund is generally able to avoid ERISAs
    application if it limits the level of investment
    by benefit plan investors to less than 25 of any
    class of the funds equity

ERISA Considerations
  • Significant Participation Test
  • Count all Benefit Plan Investors
  • Employee Benefit Plans subject to ERISA
  • Taft-Hartley (multi-employer) Plans
  • Certain church plans
  • IRAs this is an easy one to miss!
  • Importantly, government plans (e.g., CALPERs,
    Colorado PERA) dont count

ERISA Considerations
  • Significant Participation Test
  • Disregard Investments by manager and affiliates
    (they are not counted in the denominator to
    calculate the 25)
  • Test on a Class Basis
  • Continuous monitoring required

ERISA Considerations
  • Assuming the private fund meets the significant
    participation test, relief can be found from the
    prohibited transactions relating to parties in
    interest through status as a QPAM or Qualified
    Professional Asset Manager.

ERISA Considerations
  • QPAM Status
  • Registered Investment Adviser AND
  • Must have in excess of 85 mm in client AUM as of
    the last day of most recent FY AND
  • Must have partner/shareholder equity in excess of
    1 mm as of the most recent balance sheet
    prepared in accordance with GAAP

ERISA Considerations
  • Other Consequences of holding plan assets
  • Performance Fees
  • Use of Affiliated Brokers
  • Cross Trades
  • Principal Transactions
  • Custody
  • Employer Securities
  • Expenses

ERISA Considerations
  • Other consequences of holding plan assets
  • Expenses
  • Indemnification
  • Potential Plan Sponsor Liability
  • Co-Fiduciary Liability
  • Fidelity Bonding
  • Information Reporting

ERISA Considerations
  • Performance Fees permissible if
  • Fund manager is an RIA
  • Decision to hire Fund manager (i.e., to invest in
    the Fund) and to pay performance fee made by
    independent fiduciary of each benefit plan
  • Each benefit plan investor has total assets of at
    least 50 mm
  • Investor can withdraw from the Fund on reasonably
    short notice

ERISA Considerations
  • Performance Fees Continued
  • Arrangement complies with Advisers Act Rule 205-3
  • Total fees paid do not exceed reasonable comp
  • Fund manager or affiliates do NOT act as market
    maker for securities transactions by Fund

ERISA Considerations
  • Performance Fees Continued
  • Perf Fee determined on annual performance, taking
    into account both realized and unrealized gains
    and losses, and where termination date is other
    than an anniversary date, net profit is
    determined from the beginning of the prior full
    year through termination date

ERISA Considerations
  • Performance Fees Continued
  • FINALLY, each benefit plan investors fiduciary
    represents that it fully understands the formula
    for calculating the perf fee and the risks
    associated with such arrangements
  • These criteria ONLY APPLY if the manager is an
    investment manager under ERISA, which it would
    not be if the significant participation test is

Other Investment Fund Considerations for
Partnerships PTP Rules under 7704
  • Under IRC Section 7704, a partnership with more
    than 100 investors will be treated as a publicly
    traded partnership and taxed as a corporation if
    interests in the partnership are traded on an
    established securities market or a secondary
    market or the substantial equivalent of such a

Other Investment Fund Considerations for
Partnerships PTP Rules under 7704
  • Options?
  • Limit income to qualifying income
  • Can be difficult to achieve 90 or more gross
    income as investment-type income
  • Commodities dont generally qualify
  • Mezzanine financings dont generally qualify
  • Limit withdrawals to redemption and repurchase
    safe harbor
  • Limit the number of investors to 100, per the
    private placement safe harbor

Other Investment Fund Considerations for
Partnerships PTP Rules under 7704
  • Resulting Practice Strict Adherence to Private
    Placement Safe Harbor for Institutionally-Oriented
    Funds to support a will tax opinion
  • Use of Multiple Funds with 100 partners
  • Modifying Investment Strategies (particularly
    targeted volatility levels) among funds to
    distinguish them

Other Investment Fund Considerations for
Partnerships PTP Rules under 7704
  • For PE funds, strict policing of transfers and
    secondary transactions is needed to establish
    that the substantial equivalent of a secondary
    market does not exist, where the PE fund has more
    than 100 partners
  • Contrast with secondary managers with significant
    funds to deploy

Other Investment Fund Considerations for
Partnerships PTP Rules under 7704
  • Growing use of Commodities
  • 90 Qualifying Income under 7704(d) relevant if
    a partnership exceeds 100 partners and permits
    withdrawals more frequently than quarterly,
    outside of the redemption and repurchase safe
  • Commodities-related income and gain is only
    Qualifying Income if a principal activity of
    the partnership is buying and selling commodities
    or options, futures or forwards with respect to

Other Investment Fund Considerations for
Partnerships PTP Rules under 7704
  • Scant Guidance as to what a principal activity
  • Examples from Percentage Holdings
  • Dedicated Investment Team Members (those holding
    a Series 3 license)
  • Number of Trades
  • of absolute value of gains and losses generated

Other Investment FundConsiderations for RICs
  • Regulated Investment Companies registered under
    the 1940 Act and electing to be taxed as RICs
    under Subchapter M.
  • 90 of its gross income must be Qualifying
    Income under IRC Section 851(b)(2).
  • Asset diversification test
  • Year-end distribution obligation to distribute
    90 of its realized taxable income for the
    taxable year

Other Investment FundConsiderations for RICs
  • Qualifying Income 90 of a RICs gross income
    must be derived annually from the qualifying
    income sources enumerated in IRC Section
  • Notably absent from the list are income and gains
    on commodities
  • Commodities are not securities under 2(a)(36)
    of the 1940 Act

Other Investment Fund Considerations for RICs
  • Growing Use of Commodities for Liquid Alternative
  • Use of offshore subsidiary blockers
  • CFC, Subpart F Income will be includable in gross
    income of the RIC
  • So long as currently distributed, it will be
    Qualifying Income
  • Limited to 25 of total asset value as of the end
    of each quarter of each tax year (includes assets
    held as collateral for derivative positions).

Other Investment FundConsiderations for RICs
  • Use of Commodity-Linked Notes (CLNs)
  • RIC pays issuer par value upon purchase, and
    receives par value back from issuer at maturity,
    adjusted up or down by the product of (1) par
    value, (2) change in value of a commodity index,
    and (3) a leverage factor not to exceed three.
  • Additional debt-like features
  • Interest payments
  • Early redemption feature for principal protection
  • No more than three year maturity
  • Status as a security somewhat unclear, but it
    is the basis of status as qualifying income

Recently Proposed Rules for RICs holding MLPs
  • In recent years, MLPs have grown in popularity as
    an investment because of their yield.

Recently Proposed Rules for RICs holding MLPs
  • Closed-end Funds and Open-End Funds have been
    launched to invest a significant portion of their
    portfolios in MLPs. Many of these funds are
    structured as RICs some are structured as C

Recently Proposed Rules for RICs holding MLPs
  • For those that are RICs, under Section
    851(b)(3)(B), to qualify as a RIC, a fund must
    have not more than 25 of its total assets in
    qualified publicly traded partnerships (as
    defined in Section 851(h)). This is part of the
    asset diversification test.

Recently Proposed Rules for RICs holding MLPs
  • Some industry participants structured as RICs
    used a subsidiary C corporation to increase
    exposure to MLPs above the 25.

Recently Proposed Rules for RICs holding MLPs
  • On August 2, 2013, the Service proposed
    regulations under Section 851(c) regarding the
    definition of a controlled group for purposes
    of the asset diversification test, to provide a
    look through for the investments of subsidiary
    C corporations.

Recently Proposed Rules for RICs holding MLPs
  • Public hearing scheduled for December 9, 2013.

Side Letter Practice Among Institutional
  • Requirement for Legal Opinions
  • Delaware law corporate opinion covering due
    authorization and enforceability of the side
  • Rubber hits the road on fiduciary issues
  • Tax opinion as to partnership status
  • Rubber hits the road on 7704 PTP safe harbors
  • FIN 48 interplay on tax positions taken at fund

Side Letter Practice AmongInstitutional Investors
  • Transparency into fund portfolio
  • More sophisticated risk management protocols
    require real time information
  • Issues with other investors
  • Provide all investors with same information
  • Use of aggregation services

Side Letter Practice Among Institutional
  • Accelerated or Enhanced Liquidity/Withdrawal
  • Issues for other investors the GPs fiduciary
  • If registered under the Advisers Act, the GP has
    additional fiduciary obligations

Side Letter Practice Among Institutional
  • Most Favored Nation clauses (MFNs)
  • Regulatory risk implement a compliance policy
    and appoint someone responsible for overseeing
    MFN compliance
  • Carve-outs
  • Founders, manager and affiliates and employees
  • By dollar amount invested
  • By regulatory conditions
  • Provide summary with identifying information
    omitted, to protect privacy
  • Take the bitter with the sweet no

Side Letter Practice AmongInstitutional Investors
  • Other Provisions
  • Non-US Withholding Taxes and Tax Filings
  • Listed Transactions and Prohibited Reportable
  • Notice Provisions (disparate informational
  • Key Person Provisions (disparate informational
  • Indemnification Limitations (esp. govt and ERISA
  • Jurisdictional issues (esp. govt plans)
  • Confidentiality/Public Records Issues

1940 Act Considerations
  • 3(c)(1) Funds Not more than 100 beneficial
    owners and not making or presently proposing to
    make a public offering (all accredited investors
    under Reg D is the norm)
  • Non-integration for taxable and tax-exempt
    parallel funds
  • Look-through for owners of 10 or more of a
    3(c)(1) funds voting securities
  • Look-through for entities formed for the purpose
    of investing in a 3(c)(1) fund, 40 test
  • General solicitation under new Rule 506(d) passed
    under the JOBS Act permissible

1940 Act Considerations
  • 3(c)(7) Funds up to 1999 record holders under
    1934 Act
  • All investors must be qualified purchasers
  • QP status for individuals means 5 mm in
  • For entities, 25 mm in investments
  • Same private placement requirement as 3(c)(1)
  • All accredited investor offerings are the norm

1933 Act Considerations
  • Per the above, all 1940 Act exemptions require an
    exemption from the registration requirements of
    the 1933 Act
  • Rule 506 of Regulation D
  • Federal Covered Security status under NSMIA
  • Blue Sky notice filings and fees
  • More aggressive state regulators

Investment Advisers Act of 1940 Considerations
  • Registration of the Manager
  • 100 mm AUM threshold for SEC registration
  • 150 mm AUM threshold for private fund advisers
    (exempt reporting adviser status)
  • State regulation
  • Performance Fees can only be charged to
    Qualified Clients

Investment Advisers Act of 1940Considerations
  • Exemption for Advisers to Venture Capital Funds
  • 80 qualifying investments in equity securities
    issued by qualifying portfolio company
  • Must be an operating company
  • Does not incur leverage for funds investment
  • Not a reporting or foreign traded company
  • Limitation on fund-level leverage 15
  • Any such leverage is for a non-renewable term not
    longer than 120 days
  • No redemptions by investors
  • Venture capital strategy representation
  • Private fund status (not registered as an
    investment company or BDC)

Investment Advisers Act of 1940 Considerations
  • With regulatory burdens come opportunities
  • Attracting institutional money

Commodity Exchange Act
  • Recent changes post-Dodd Frank eliminated Rule
    4.13(a)(4), which was an exemption from CPO
    registration for pools offered to highly
    sophisticated investors
  • Rule 4.13(a)(3) exemption still available, but
    more limited, available to managers of private
  • Aggregate initial margin does not exceed 5
  • Aggregate net notional exposure does not exceed

Commodity Exchange Act
  • 4.13(a)(3) sales only to Qualified Eligible
    Persons (QPs automatically qualify)
  • Many managers implementing quantitative
    strategies must register as CPOs and CTAs

Broker/Dealer Registration Requirements under the
1934 Act for PE Fund Managers
  • 1934 Act Section 15(a)(1) prohibits any person
    from effecting transactions in, or inducing or
    attempting to induce the purchase or sale of, any
    security, unless that person is registered as a
  • Section 3(a)(4)(2) defines a broker as any person
    engaged in the business of effecting transactions
    in securities for the account of others

Broker/Dealer Registration Requirements under the
1934 Act for PE Fund Managers
  • Key Factors
  • Participant in key parts of transaction
  • Prior experience in securities transactions
  • Disciplinary issues
  • Handling of funds or securities

Broker/Dealer Registration Requirements under the
1934 Act for PE Fund Managers
  • David W. Blass, Chief Counsel, Division of
    Trading and Markets,?SEC, Speech on April 5, 2013
    to the ABA Trading and Markets Subcommittee A
    Few Observations on the Private Funds Space.

Broker/Dealer Registration Requirements under the
1934 Act for PE Fund Managers
  • Very limited applicability of the issuer
    exemption in 1934 Act Rule 3a4-1.
  • Generally applicable to an operating company
    personnel of which only occasionally engage in
    securities sales (no more than once every 12
  • Personnel must regularly perform substantial
    duties not related to sales of securities
  • No transaction-based compensation

Broker/Dealer Registration Requirements under the
1934 Act for PE Fund Managers
  • Transaction-based compensation is important,
    butif issuer personnel are regularly engaged in
    broker/dealer activity, broker/dealer
    registration may be triggered
  • Continuous capital raising activities
  • Internal marketing personnel had better be
    registered reps of a broker/dealer
  • Private Placements where is the broker/dealer?

Broker/Dealer Registration Requirements under the
1934 Act for PE Fund Managers
  • Compliance Point How certain fees are booked
  • commissions and sales charges appearing on
    the G/L need to be paid to a broker/dealer
  • SEC specifically asks for accounting records in
    its examinations
  • Internal protocols to vet and document the status
    of payees as broker/dealers should be implemented
  • Payment to an unregistered broker/dealer blows
    the Blue Sky exemption, opens the issuer to
    rescission liability

Broker/Dealer Registration Requirements under the
1934 Act for PE Fund Managers
  • Other PE fund and manager activities
  • Investment banking or brokerage activities for PE
    fund portfolio companies
  • Fees charged for sales or financings executed for
    portfolio companies

Chamberlain Hrdlicka Financial Services Practice
  • Asset Management. Chamberlain Hrdlickas asset
    management attorneys experience spans multiple
    industries and asset classes.  We routinely
    advise our clients on regulatory aspects of fund
    management and investment advisory operations.
      Our asset management team provides legal
    services to a wide range of clients in the asset
    management industry including registered and
    unregistered investment advisers, broker-dealers,
    corporate entities with multiple subsidiaries,
    publicly offered closed-end funds and mutual
    funds, private investment funds, and asset and
    wealth management firms, trust companies as well
    as other organizations with various fiduciary
    responsibilities.  Our practice includes the
    formation and representation of investment
    companies, sponsors, advisers and directors,
    including SEC and FINRA regulatory compliance
    matters fund formation, distribution and
    marketing fund board and governance matters
    compliance manuals and testing and corporate
    transactions involving asset management
    businesses, including mergers, acquisitions and
    joint ventures.

Chamberlain Hrdlicka Financial Services Practice
  • Broker/Dealers
  • The attorneys at Chamberlain Hrdlicka routinely
    counsel broker-dealer clients on a broad range of
    legal issues
  • Dodd-Frank and other financial institution
    regulatory reform
  • Regulatory, compliance and securities law matters
    relating to broker-dealers
  • Advise broker-dealers on the rules of the SEC,
    FINRA and other regulatory and self-regulatory
  • Registration requirements, including with regard
    to unregistered affiliates of registered
    broker-dealers that wish to engage in
    securities-related activities
  • Our clients include a broad range of
    broker-dealers, as well as their
    non-broker-dealer subsidiaries and affiliates. We
    also serve small and mid-sized firms, and
    affiliates of insurance, commercial banking and
    other financial services companies.  Chamberlain
    Hrdlicka also provides its broker-dealer clients
    with a full range of corporate, securities, MA,
    tax and other advice in connection with their
    investment banking activities.

Chamberlain HrdlickaFinancial Services Practice
  • ERISA/Benefit Plan Investors
  • Review transactions with ERISA plan investors
    (401k plans, pension plans including Taft-Hartley
    plans, Keogh plans, IRAs, etc.)  in
    pooled investment funds managed by private fund
    managers for compliance with applicable ERISA
    requirements including fiduciary responsibility,
     QPAM status, plan assets rule, prohibited
    transactions and exemptions therefrom. Advise
    on fund offering documents for  provisions that
    address both ERISA plan investors and plan
    investors other than ERISA plan investors, such
    as US state and local government and foreign
    pension plans. 

Chamberlain HrdlickaFinancial Services Practice
  • Family Office
  • The attorneys at Chamberlain Hrdlicka understand
    the nature of representing wealthy individuals
    and their families.  Our Family Office attorneys
    are very knowledgeable in not only establishing,
    but sustaining a Family Office for future
    generations.  We can offer our clients an array
    of services which include, but are not limited
    to, investment management regulation and
    compliance, income, estate and gift tax planning,
    business succession planning, as well as legal
    aspects of management of closely-held businesses
    through a Family Office.

Chamberlain HrdlickaFinancial Services Practice
  • Financial Services
  • Chamberlain Hrdlickas financial services team is
    equipped to handle the ever-changing landscape of
    the financial sector and help our clients reach
    their business objectives.  Our sophisticated
    financial services practice includes work in many
    areas of the industry, including mergers and
    acquisitions, asset management, capital market
    activities, product development and compliance,
    federal and state securities and domestic and
    offshore company formation.  Chamberlain Hrdlicka
    routinely counsels their clients on matters
    regarding regulatory initiatives and legislation,
    as well as privacy law compliance.

Chamberlain HrdlickaFinancial Services Practice
  • Hedge Funds
  • Chamberlain Hrdlicka understands sophisticated
    private managers need legal advisers with a level
    of knowledge and understanding of complex
    investment strategies that can support such
    sophistication. Our hedge fund attorneys have
    experience working with managers with many
    different fund styles, from single-strategy to
    multi-strategy hedge funds and funds of hedge
    funds. Chamberlain Hrdlicka assists clients
    throughout all stages of hedge fund development,
    providing counsel on the establishment and
    operation of hedge funds, including the
    preparation of fund formation documents and
    private placement memoranda. Chamberlain
    Hrdlickas hedge fund practice is dedicated to
    providing our clients with a partner to help
    assess and manage legal risk so they can focus on
    maximizing return. 

Chamberlain HrdlickaFinancial Services Practice
  • Investment Advisors
  • Chamberlain Hrdlicka attorneys advise clients in
    all aspects of their investment advisory
    business, including both retail and institutional
    advisory businesses.  We counsel our investment
    adviser clients on the formation and operation of
    many types of alternative investment vehicles,
    including hedge funds, fund-of-funds, venture
    capital and private equity funds, private real
    assets funds and other public and private pooled
    investment vehicles.  We also advise our clients
    on the complex federal and state regulatory,
    legal and compliance issues affecting investment
    advisers and their affiliates, including
    pay-to-play rules and lobbyist registration
    compliance matters.

Chamberlain HrdlickaFinancial Services Practice
  • Investment Management
  • Chamberlain Hrdlickas investment management team
    provides a full range of legal, regulatory and
    advisory services including business formation,
    governance issues, transactions, registration,
    documentation and agreements, operational
    matters, and other corporate matters.   We are
    able to advise our clients through each stage of
    investment maturation, assisting clients from
    fund formation and management to distribution
    arrangements with financial intermediaries.  Our
    clients include mutual funds, closed-end funds,
    domestic and offshore private investment funds
    (including venture capital, private equity, and
    hedge funds), investment advisers, and

Chamberlain HrdlickaFinancial Services Practice
  • Private Equity Funds
  • Chamberlain Hrdlickas private equity attorneys
    can advise clients throughout the life cycle of a
    private equity transaction, from formation, to
    investments and ultimately to exit. We have
    expertise and experience in sophisticated
    transactions including leveraged buyouts,
    management buyouts, spin-offs, venture capital
    financings, going-private transactions, and
    recapitalizations and dispositions, as well as
    cross-border and international transactions.

Chamberlain HrdlickaFinancial Services Practice
  • Private Funds
  • Chamberlain Hrdlickas Corporate, Securities
    Finance practice group includes a team of
    attorneys who are well-versed in all legal and
    regulatory matters relevant to managing and
    investing in private funds. Our experience across
    many private fund structures, including private
    investment funds, hedge funds and private equity
    funds, enables us to assist clients in a wide
    scope of fund investment activities.
  • We help our clients move forward with private
    fund activities, employing a cross-disciplinary
    approach that incorporates the firms greater
    Corporate, Securities Finance practice, along
    with other relevant practice areas including tax
    and tax planning. At any juncture in private fund
    operations, from fund formation to ongoing fund
    management, our team can navigate the legal,
    regulatory and compliance and governance matters,
    advancing for our clients the diverse objectives
    of both fund sponsors and investors.

Chamberlain HrdlickaFinancial Services Practice
  • Wealth Management
  • Chamberlain Hrdlickas attorneys routinely
    counsel our financial services industry clients
    on their wealth management businesses. We
    understand wealth management represents the
    intersection of many disciplines, from investment
    advisory, broker/dealer, family office and tax
    and estate planning, to international tax and
    cross-border planning.  Our strength in the tax
    and international tax areas also provides
    additional support to our clients with wealth
    management businesses.

Jonathan W. DePriest
  • Jonathan DePriest maintains a sophisticated merger
    s and acquisitions practice, with an emphasis on
    investment management and financial
    services industries and asset management and
    wealth management firms, as well as private
    pooled investment vehicles (such as hedge funds
    and private equity funds).  Mr. DePriest has
    successfully concluded over 2 billion in merger
    and acquisition transactions, drawing also upon
    the Firms strength in the tax field to provide
    sophisticated analysis and support in structuring
  • Mr. DePriest also counsels asset management
    clients in launching and managing private pooled
    investment vehicles, and serves as counsel to the
    adviser for regulated investment companies.  Mr.
    DePriest has assisted in launching private
    investment funds that currently manage over 7
    billion in assets.  These funds have comprised
    diversified multi-asset class, multi-strategy
    funds of funds as well as single-strategy hedge
    funds, liquid alternatives funds, registered and
    regulated investment companies, and alternative
    investments such as timber, private energy and
    private equity.

Chamberlain Hrdlicka WhiteWilliams Aughtry
  • Atlanta
  • Denver
  • Houston
  • Philadelphia
  • San Antonio
Write a Comment
User Comments (0)