This episode covers the rules for counting beneficial owners under section 3(c)(1) of the Investment Company Act. Tune in to find out about the differences between a 3(c)(1) fund and a 3(c)(7) fund, the pros and cons of each, what counts as a beneficial owner, and what options you have when you reach the 100 beneficial owner limit of a 3(c)(1) fund. 

Key Points From This Episode:

• What to consider when choosing between 3(c)(1) and 3(c)(7) for your fund. 
• The definition of a beneficial owner. 
• Situations where you have to count each of the underlying owners of your entity investors as beneficial owners of your fund. 
• Questions you are likely to ask yourself as you approach the 100 beneficial owner limit. 
• Why you might not be able to start another 3(c)(1) fund when you reach that limit.
• Why you can convert a 3(c)(1) fund to a 3(c)(7) fund (but you may not want to).
• A common solution for forming a parallel 3(c)(7) fund and the benefits of this.

Disclaimer:

This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/

Links Mentioned in Today’s Episode:

Episode 1: Private Fund Legislative Overview – https://open.spotify.com/episode/1aTrBhJ0t1UCnSGY0SfUXQ 

Dave Rothschild – https://www.linkedin.com/in/davidcrothschild/

Cole-Frieman & Mallon LLP – https://colefrieman.com/

Music by Joe Ginsberg – https://www.instagram.com/thejoeginsberg

For any questions or comments, email: [email protected]

In this episode, we summarize the most interesting developments in the digital asset and private fund regulatory world from 2022, before highlighting some periodic reminders and upcoming deadlines that every manager should keep in mind at the end of the year. 

Key Points From This Episode:

• A list of some of the biggest news stories that contributed to the current digital asset market.
• Periodic reminders that every manager should keep in mind at the end of the year.
• Upcoming deadlines that you should keep in mind.

Disclaimer:

This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/

Links Mentioned in Today’s Episode:

Cole-Frieman & Mallon 2022 End of Year Update - https://hedgefundlawblog.com/cole-frieman-mallon-2022-end-of-year-update.html 

Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/

Cole-Frieman & Mallon LLP - https://colefrieman.com/

Music by Joe Ginsberg - https://www.instagram.com/thejoeginsberg

For any questions or comments, email: [email protected]

This episode offers a broad overview of the CFTC and how its rules might apply to Digital Asset Fund Managers. 

Key Points From This Episode:

• Why you may also be a commodity pool operator if you are a fund manager. 
• The types of transactions that the CFTC regulates.
• The one exemption that is most likely to apply to you if you are a CPO and what it requires.
• How to register as a CPO if you are not exempt.
• An additional partial exemption that you may be able to claim.

Disclaimer:

This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/

Links Mentioned in Today’s Episode:

Dave Rothschild – https://www.linkedin.com/in/davidcrothschild/

Cole-Frieman & Mallon LLP – https://colefrieman.com/

Music by Joe Ginsberg – https://www.instagram.com/thejoeginsberg

BitMEX - https://www.cftc.gov/PressRoom/PressReleases/8522-22

Bitfinex - https://www.cftc.gov/PressRoom/PressReleases/8450-21

Kraken - https://www.cftc.gov/PressRoom/PressReleases/8433-21

Ooki DAO - https://www.cftc.gov/PressRoom/PressReleases/8590-22

Qualified Eligible Person definition - https://www.govinfo.gov/content/pkg/CFR-2021-title17-vol1/xml/CFR-2021-title17-vol1-sec4-7.xml

For any questions or comments, email: [email protected]

Many of the laws that we’ve discussed on this show hinge on whether the assets you’re investing in are securities. So, we’ve decided to clearly define securities for you, while assessing if it’s a good idea to bet your business on additional assets not being securities. We discuss which assets can be securities, why Bitcoin is not a security as well as the status of other digital currencies, the Howey test and what an investment contract is, and why the SEC is not out to be your friend.  

Key Points From This Episode: 

• Today we will be defining what securities are and if it’s wise to bet on non-securities. 
• The types of assets that can be securities; Bitcoin is not one of them. 
• How digital assets can only be securities if it is an investment contract. 
• What an investment contract is: the Howey test.  
• The semantics of securities versus tokens. 
• Why the SEC will rarely give you the answer you’re looking for. 
• How investing in non-securities could land you in big trouble. 

Disclaimer:

This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/

Links Mentioned in Today’s Episode:

The Howey Test on Investopedia - https://www.investopedia.com/terms/h/howey-test.asp

SEC - https://www.sec.gov/

Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/

Cole-Frieman & Mallon LLP - https://colefrieman.com/

Music by Joe Ginsberg - https://www.instagram.com/thejoeginsberg

For any questions or comments, email: [email protected]

Today, we bring you an impromptu episode, packed with Tokens of Wisdom on how to navigate the recent FTX fallout. If your fund has assets stuck on FTX, what should you be thinking about? 

Key Points From This Episode:

• The importance of communicating with your investors and sticking to the facts. 
• How to assess your options moving forward.
• Ways to navigate the legal implications of the fallout. 
• Why you should ensure that your risk disclosure is up-to-date and accurate. 
• Side pockets and other mechanisms.  

Disclaimer:

This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/

Links Mentioned in Today’s Episode:

Dave Rothschild

https://colefrieman.com/

Music by Joe Ginsberg; IG: @thejoeginsberg

For any questions or comments, email: [email protected]

If you’re an aspiring fund manager looking to launch a fund, in this episode, we explain how to navigate the Investment Advisers Act and related state laws. We break down why you need to register as an investment adviser or claim a valid exemption from registration, how to determine which regulatory authority has jurisdiction over your business, and how to analyze their investment adviser regulations. 

Key Points From This Episode:

• The regulatory definition of an investment adviser.
• Why you need to register as an investment advisor or claim a valid exemption from this.
• How to determine who has jurisdiction over your business.
• How to analyze what these regulations say and what exemptions may be available to you.
• The two most common forms of investment adviser exemptions: de minimis exemptions and private fund exemptions. 
• Additional requirements for managers to 3(c)(1) funds. 
• The filing you need to make if you qualify for a private fund exemption. 
• The three main benefits of claiming an exemption or qualifying for an exemption and avoiding registration.
• Drawbacks of an exemption.

Disclaimer:

This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For any questions, please email [email protected].

Links Mentioned in Today’s Episode:

Dave Rothschild

Cole-Frieman & Mallon LLP 

Music by Joe Ginsberg; IG: @thejoeginsberg

In this introductory episode, Dave gives a high-level overview of the main legislation that governs a private fund business: the Securities Act (which governs the sale of interests in your fund to investors); the Investment Company Act (which governs the fund entity); and the Investment Advisers Act (which governs the manager acting as an investment adviser).

For each law, he walks through the main considerations private fund managers need to deal with:

·         Securities Act – 506(b) or 506(c)?

·         Investment Company Act – 3(c)(1) or 3(c)(7)?

·         Investment Advisers Act – how to analyze regulatory obligations?

This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/.

Music by Joe Ginsberg; IG: @thejoeginsberg.