Episode 36: Adviser Integration

Tokens of Wisdom

Last episode we dissected the SEC’s “venture capital fund” definition and discussed how, if an adviser manages only VC funds, there is no AUM ceiling on its ability to remain exempt from registration. If that same adviser manages money for any non-Venture capital fund, it has to register as an investment adviser once AUM hits $150mm. This can lead some less scrupulous investment advisers to try to “game” the system by forming new adviser entities, thinking they can skirt regulation by forming new legal entities.

Well, not so fast. The wool can’t be pulled over Uncle Sam’s eyes that easily (unfortunately?) – the SEC has a doctrine of “adviser integration” where under certain circumstances, two ostensibly separate investment adviser entities are treated as one business for purposes of advisers act compliance.

Key Points From This Episode:

• Under what circumstances are two ostensibly separate investment adviser entities treated as one business?
• What is operational independence?
• The four areas the SEC focuses its analysis:
• Capital structure
• Control
• Personnel
• Investment decision-making
• Why, if this analysis is relevant to you, you really need a good lawyer.

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

For any questions or comments, email: [e-mail]