SharpeFundsLaw.com
content top

Questions Remain Regarding Impact of Brexit on Fund Managers

Although the dust has somewhat settled following the historic “leave” vote on June 23, 2106, in which voters in the United Kingdom elected to leave the European Union, many questions remain.  Of particular importance to fund managers based in the UK is the question of Brexit’s impact on the applicability of AIFMD.  There are several possible scenarios that have been raised.  The UK may elect for a full withdrawal, in which case, it will no longer be a “European fund manager” under the terms of AIFMD, thus eliminating the benefits of European “passporting.”  Alternatively,...
Continue Reading

CFTC Adopts Rules for the Cross-Border Application of Its Margin Rules

On May 24, 2016, the U.S. Commodity Futures Trading Commission (“CFTC”) adopted rules (the “Final Rule”) establishing a framework for applying the CFTC’s previously adopted margin rules (the “CFTC Margin Rules”) to cross-border uncleared swaps.  The Final Rule provides that certain parties that are subject to the CFTC Margin Rules may, in certain circumstances, (i) be partially or wholly exempt from the CFTC Margin Rules or (ii) satisfy certain requirements under the CFTC Margin Rules by complying with certain foreign jurisdictions’ margin requirements instead.  The Final...
Continue Reading

DIRECTOR OF SEC’S DIVISION OF ENFORCEMENT PROMISES MORE ENFORCEMENT ACTIONS AGAINST PRIVATE EQUITY FUND ADVISERS

In a recent speech, Andrew Ceresney, the Director of the SEC’s Division of Enforcement, discussed his division’s focus on the private equity industry, reviewing eight recent enforcement actions that Enforcement’s Asset Management Unit has brought against private equity advisers, and vowing that there will be “more to come.” Mr. Ceresney said that the enforcement actions against private equity advisers so far fall into three interrelated categories:  (i) advisers that receive undisclosed fees and expenses; (ii) advisers that impermissibly shift and misallocate expenses; and (iii)...
Continue Reading

FINCEN CUSTOMER DUE DILIGENCE RULES EXCLUDE MOST PRIVATE FUNDS FROM DEFINITION OF LEGAL ENTITY CUSTOMERS

On May 5, 2016, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued final rules (the “Final Rules”) on customer due diligence requirements for banks, broker-dealers, mutual funds, and futures commission merchants and introducing brokers in commodities (collectively, “covered financial institutions”).  Among other things, the Final Rules require covered financial institutions to identify and verify the beneficial owners of legal entity customers. The Final Rules define a “legal entity customer” as a “corporation, limited liability...
Continue Reading

SEC CHAIR WHITE THROWS SUPPORT BEHIND FSOC STATEMENT ON REVIEW OF ASSET MANAGEMENT PRODUCTS AND ACTIVITIES

In a public statement earlier this month, SEC Chair Mary Jo White expressed her support for the Financial Stability Oversight Council’s (“FSOC”) Update Statement on its review of asset management products and activities for potential financial stability risks.  The Update Statement includes an evaluation of risks focused on the following areas: (1) liquidity and redemption; (2) leverage; (3) operational functions; (4) securities lending; and (5) resolvability and transition planning. Per her public statement, Chair White also believes that FSOC’s work in this area is complementary to...
Continue Reading

FINCEN’S LONG-AWAITED BENEFICIAL OWNER DUE DILIGENCE AML RULE COULD BE FINALIZED SOON

Earlier this month, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of the Treasury, submitted its long-awaited Final Rule on due diligence of beneficial owners of customer accounts to the White House Office of Management and Budget.  This new anti-money laundering rule is expected to require financial institutions to obtain and possibly verify certain information from customers regarding the beneficial owners of customer accounts.  Information about the status of the submission of the Final Rule can be found...
Continue Reading

Sweeping Changes Proposed to Tax Treatment of Related-Party Debt May Impact Private Funds

Recently proposed Treasury regulations under IRC § 385 (the Proposed Regulations) would potentially treat related-party debt, in whole or in part, as equity for U.S. tax purposes. The Proposed Regulations generally apply to debt among members of an expanded corporate group, which includes certain controlled partnerships, without regard to whether any of the parties have engaged in an inversion transaction or whether the group is U.S. or non-U.S. parented. The Proposed Regulations would require corporate groups to satisfy new documentation requirements in order for related-party debt to be...
Continue Reading