Private Fund Insights Blog

The U.S. government’s Outbound Investment Security Program, stemming from Executive Order 14105 issued in August 2023 and finalized in the Treasury’s rules effective Jan. 2, 2025, reflects ever-increasing U.S. governmental concerns at the intersection of global capital flows and national security. The OISP targets U.S. investments in sensitive technologies in “countries of concern,” primarily the People’s Republic of China (including Hong Kong and Macau), but it doesn’t just add another layer of compliance. Instead, it fundamentally alters how general ...

On March 12, 2025, the Securities and Exchange Commission (SEC) issued a No-Action Letter (NAL) that clarified and expanded the definition of “reasonable steps” an issuer must take when making an offering under Rule 506(c). The new guidance increases the ability for small funds to raise capital and solicit investors by decreasing the administrative burdens previously applicable to Rule 506(c) offerings.

Background: SEC Rules 506(b) and 506(c)

Generally, under Section 5 of the Securities Act of 1933, any offers or sales of securities must be registered with the SEC unless an ...

On Sept. 4, 2024, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published a final rule imposing new anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements on certain registered investment advisers and exempt reporting advisers. The final rule takes effect on Jan. 1, 2026. The requirements of the new rules are risk-based, and will require advisers to buyout, venture capital, real estate and other types of private funds to analyze the risks that their funds may be used in connection with illicit activities.

Under Section 5 of the Securities Act of 1933, all offers and sales of securities, including offers or sales of limited partnership interests or membership interests in a private fund, must be registered with the Securities and Exchange Commission, unless an applicable exemption applies to such an offer or sale. Regulation D, promulgated under the Securities Act, and Section 4(a)(5) of the Securities Act both contain commonly used exemptions that permit issuers to offer and sell securities without having to register the offering with the SEC; however, such offerings are not ...

As in most industries, private fund sponsors are increasingly assessing and beginning to adopt artificial intelligence-powered tools to rapidly analyze large volumes of data, identify trends and patterns and to generally make more informed decisions both in connection with internal operations and management of their funds and for enhancing efficiencies at their portfolio companies. AI technology’s ability to process information from disparate sources, such as financial reports, news articles and social media, and to purportedly predict market movements and inform ...

In June, California approved amendments to its October 2023 law, Fair Investment Practices by Venture Capital Companies (California VC Diversity Law). The California VC Diversity Law requires covered venture capital investment vehicles to report aggregated demographic information about the founding members of their portfolio companies.

Covered Entities

The California VC Diversity Law applies to “venture capital companies” that meet the following two requirements. First, the venture capital company must primarily engage in the business of investing in startup ...

Registered investment advisers are subject to record-keeping requirements regarding certain written communications, and in the last several years, the U.S. Securities and Exchange Commission has increased enforcement efforts against “off-channel communications” (i.e., business-related communications on unapproved electronic devices and systems, such as texts) that it believes violate these requirements.¹ In a recent matter, on April 3, 2024, the SEC issued an enforcement action against Senvest Management LLC for violations of these rules and of Senvest’s own ...

Yesterday, a three-judge panel of the United States Court of Appeals for the Fifth Circuit unanimously vacated the Private Fund Adviser Rules adopted by the Securities and Exchange Commission (which we previously summarized) in their entirety, holding that the SEC exceeded its statutory authority in adopting the PFA Rules in August of 2023. The case was brought against the SEC by a group of industry associations that represent the interests of fund managers and investment sponsors. It is possible that the SEC will seek rehearing en banc by the Fifth Circuit or petition the Supreme ...

Fund sponsors often engage investment banking or placement firms to help raise capital or generate deal flow for their funds. In exchange, the sponsor may offer a cash fee, a piece of the sponsor’s carried interest, equity in the applicable portfolio company, or some other form of compensation. Many sponsors and advisors are unaware that these activities can trigger broker-dealer registration requirements under federal and state law. The registration process is cumbersome and expensive, but the unregistered status of a firm that engages in such activities can create serious ...

The short answer is no. A private investment fund (whether a venture capital fund, private credit fund, private equity fund, hedge fund, fund-of-funds or other type of non-registered fund) is not legally required to have a private placement memorandum or other offering document. Producing a high-quality PPM takes a material amount of time, work and money for a fund sponsor, many of whom are eager to avoid the exercise to focus efforts and resources on other matters. Whether a sponsor must or should prepare a PPM is driven mainly by the expectations and requirements of the potential fund ...

Effective as of Jan. 1, 2024, many businesses and corporate entities, both foreign and domestic, must file informational reports on their beneficial owners with the Financial Crimes Enforcement Network under the Corporate Transparency Act. Robinson Bradshaw published an article summarizing the CTA and highlighting best practices for achieving compliance, located here. The CTA requirements are complex and allow for numerous exemptions, and the availability of each exemption depends on the specific facts and circumstances.

The following analysis considers various CTA ...

The Tax Court, in a victory for the IRS, recently issued an opinion holding the limited partner exception to the Self-Employed Contributions Act Tax must be construed narrowly. The court held a limited partner under state law is not automatically a limited partner for purposes of the SECA exclusion.

SECA Background

SECA imposes a tax on the self-employment earnings of individuals, which mirrors the rates applicable to wages of employees under FICA—a 12.4% rate applicable to a capped portion of earnings, plus a 2.9% rate on all earnings (with an additional 0.9% charge above certain ...

On Aug. 23, the U.S. Securities and Exchange Commission adopted the PFA Rules, rules and rule amendments under the Investment Advisers Act of 1940 that impose new requirements and obligations on private fund advisers. In previous blog posts, we provided a brief summary of the PFA Rules, discussed the new quarterly reporting requirements, analyzed the impact upon adviser-led secondaries, examined the new restricted activities rule and considered the new preferential treatment rules. This post focuses on the application of the PFA Rules to existing private funds’ contractual ...

On August 23, the United States Securities and Exchange Commission (the “SEC,” or the “Commission”) adopted rules and rule amendments (the “PFA Rules”) under the Investment Advisers Act of 1940 (the “Advisers Act”) that impose new requirements on private funds and their investment advisers. Our prior blog posts on the PFA Rules offered a broad overview of the PFA Rules’ most important changes, summarized how the PFA Rules impact registered investment advisers’ quarterly reporting requirements, examined the PFA Rules’ effect on adviser-led secondaries

Yesterday, the United States Securities and Exchange Commission (the “SEC” or the “Commission”) Division of Examinations released its examination priorities to inform market participants of the key topics and priorities that the SEC plans to focus on when conducting examinations on SEC-registered investment advisers, investment companies, broker-dealers, transfer agents, municipal advisers, securities-based swap dealers, clearing agencies and other self-regulatory organizations in the coming year.

This article summarizes upcoming examination ...

On August 23, the United States Securities and Exchange Commission (the “SEC” or “Commission”) adopted rules and rule amendments (the “PFA Rules”) under the Investment Advisers Act of 1940 (the “Advisers Act”) that impose new requirements and obligations on investment advisers to private funds. In a series of blog posts on the PFA Rules, we summarized the most notable regulatory changes, analyzed the SEC’s new quarterly reporting requirements and reviewed the PFA Rules’ impact on adviser-led secondary transactions. This post addresses the “Restricted ...

On August 23, 2023, the United States Securities and Exchange Commission (the “SEC” or “Commission”) adopted rules and rule amendments (the “PFA Rules”) under the Investment Advisers Act of 1940 (the “Advisers Act”)¹ that impose new requirements and obligations on investment advisers to private funds. In our prior blog posts on the PFA Rules, we briefly summarized the SEC’s additions to the regulatory landscape for private funds and provided a more detailed exploration of the new quarterly reporting requirements applicable to registered investment ...

On August 23, the United States Securities and Exchange Commission (the “SEC” or “Commission”) adopted rules and rule amendments (the “PFA Rules”) under the Investment Advisers Act of 1940 (the “Advisers Act”) that impose new requirements and obligations on investment advisers to private funds. In our prior blog post on the PFA Rules, we briefly summarized the SEC’s additions to the regulatory landscape for private funds. This blog will focus on one aspect of the PFA Rules – how registered investment advisers must report on fees, expenses and performance on a ...

Yesterday, the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) adopted rules and rule amendments (the “PFA Rules”) under the Investment Advisers Act of 1940 (the “Advisers Act”) that impose new requirements and obligations on investment advisers to private funds.¹ The Commission’s adoption of the PFA Rules, which were initially proposed in early 2022, follows an extensive period of commentary from across the private fund industry.

Robinson Bradshaw attorneys are reviewing the SEC’s 660-page Release announcing the PFA Rules, and ...

After the 2008 financial crisis, the U.S. Securities and Exchange Commission (the “SEC” or “Commission”) introduced the Form PF (Private Fund), which the SEC intended to serve as a tool for monitoring and assessing systemic market risks posed by private funds. Since 2011, following the Dodd-Frank Act (“Dodd-Frank”), the SEC has required certain investment advisers to file a Form PF with the agency to report information about the private funds they manage. As mandated by Dodd-Frank, Form PF provides the SEC and the Financial Stability Oversight Council (“FSOC” ...

Portfolio companies of venture capital and private equity funds usually motivate key executives through compensation tied to performance upon an exit. Such structures align the incentives of the fund with those of the executives but can lead to several tax issues that warrant thoughtful consideration.

280G Background
Section 280G of the Internal Revenue Code seeks to curb excessive executive compensation triggered by a change in control. The rules apply when a C corporation experiences a change in control if certain “disqualified individuals” (including 1% shareholders ...

Private equity funds have become major players in the professional health care delivery sector in recent years due to acquisitions of professional practices, including physician practices, senior living facilities and the like. Such activity has attracted attention from regulators, policymakers and the public, with a particular focus on impacts on quality of care and potential conflicts of interest for providers. Acquisitions of professional practices by private equity funds involve myriad regulatory and compliance obligations at both the federal and state level, and ...