The secondary market for limited partner interests in venture capital funds has witnessed robust growth in recent years as an increasing number of existing venture fund investors seek an early exit from their positions for one reason or another (e.g., liquidity needs, portfolio rebalancing, end of their own term, etc.). That demand for an early exit has been met by an equally robust growth in secondary capital looking to acquire existing interests at a discount. For the most part, the secondary market has operated pretty efficiently as many venture funds
Continue Reading Withholding Requirements for Transfers of Venture Capital Fund Interests by Non-US Limited PartnersVenture Capital Fund
Treasury’s FinCEN and SEC Propose Rule Requiring Investment Advisers to Develop Customer Identification Programs
By DLA Piper LLP on
Posted in VC Funds and Tax
Written by: David Stier, Eric Forni, Katrina Hausfeld, David Solander and Lauren O’Neil
On May 13, 2024, the Securities and Exchange Commission (SEC) and the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) jointly proposed a new rule that would impose requirements on SEC-registered investment advisers (RIAs) and exempt reporting advisers (ERAs) to establish, record, and maintain customer identification programs (CIPs) under the US Bank Secrecy Act (BSA) and related regulations.
The SEC and FinCEN designed the proposal to target illicit actors, illicit funds, and…
Private Fund Adviser Rules Vacated: Key Takeaways
By DLA Piper LLP on
Posted in VC Funds and Tax
Written by: David Solander, Meghan Carey and Jessica McKinney
A three-judge panel of the US Court of Appeals for the Fifth Circuit unanimously vacated the US Securities and Exchange Commission (SEC)’s private fund adviser rules and amendments (Private Fund Rules),[1] stating that “no part of it can stand.”[2]
In August 2023, the SEC adopted the Private Fund Rules, which included five new rules: the Private Fund Audit Rule, the Quarterly Statements Rule, the Restricted Activities Rule, the Adviser-Led Secondaries Rule, and the Preferential Treatment Rule. These rules…
Continue Reading Private Fund Adviser Rules Vacated: Key TakeawaysVenture Capital Funds: 3(c)(1) Funds vs. 3(c)(7) Funds
By Mel Wheaton, Lindsey Haythorn, Chris Thorson & Luke Postma on
Posted in VC Funds and Tax
Provided that they meet certain criteria, venture capital funds are not required to be registered as an “investment company” by the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940 (the “Investment Company Act”). The Investment Company Act defines “investment company” to include any issuer which is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities. Venture capital funds would typically fall under this definition; however, most venture capital funds are…
Continue Reading Venture Capital Funds: 3(c)(1) Funds vs. 3(c)(7) Funds