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How CCOs Can Prepare a Custody Rule Review
September 23, 2013
Under the Securities and Exchange Commission’s custody rule (Investment Advisers Act Rule 206(4)-2(d)(2)), a registered investment adviser is deemed to have custody of client assets if the adviser or a so-called “related person” of the adviser — including parties under common control with the IA — directly or indirectly holds, or has any authority to obtain possession of, client funds or securities. Many managers of private funds, such as most hedge or private equity funds, are deemed to have custody because their investment management agreements grant them the authority to withdraw funds or securities from a client account or because the manager or a related person serves as a general partner or managing member of a fund vehicle. In this article, partner Marc E. Elovitz and former Schulte lawyer Brian Daly discuss the custody rule’s obligations and how CCOs can structure a custody rule review.
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Alerts
The US Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) have overhauled Form PF and private fund managers have until March 12, 2025, to begin reporting on the new Form. The changes to the reporting requirements mandated by the amendments to the Form (“Form PF Amendments”) will require substantial preparation by many managers.[1]
Alerts
On March 1, 2024, New York Governor Kathy Hochul signed into law an amended version of the New York LLC Transparency Act (“NYLTA”),[1] requiring certain limited liability companies (“LLCs”) formed or authorized to do business in New York (each, a “NY Reporting Company”) to file a beneficial ownership information (“BOI”) report with the NY Department of State (“NY DOS”). Each NY Reporting Company will be required to disclose on its BOI report identifying information pertaining to each individual who directly or indirectly exercises substantial control or owns or controls 25 percent or more of the ownership interests of a NY Reporting Company (each, a “Beneficial Owner”) and the individuals involved in the NY Reporting Company’s formation or registration to do business in New York (each, an “Applicant”). Information reported to NY DOS will be maintained in a private database not accessible to the public. The NYLTA goes into effect on Jan. 1, 2026 and requires the NY DOS to promulgate regulations implementing the legislation.
Alerts
The US Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) have overhauled Form PF and private fund managers have until March 12, 2025, to begin reporting on the new Form. The changes to the reporting requirements mandated by the amendments to the Form (“Form PF Amendments”) will require substantial preparation by many managers.[1]