Tokens of Wisdom

In a less-than-stellar fundraising environment, some aspiring fund managers want to dip their toe into the fund waters by forming an SPV to invest in one high-conviction idea. An SPV in this context is just a “mini fund” - it’s an investment vehicle formed by a manager to pool capital from outside investors to make (usually) a single investment.  Key Points From This Episode: Different ways in whi...

In a less-than-stellar fundraising environment, many aspiring fund managers want to dip their toe into the fund waters, without incurring the expense of a full fund offering. This is where an incubator fund might make sense, and that’s the topic of today’s episode. An incubator fund allows an aspiring manager to test an investment strategy and develop a track record that can eventually be marketed...

Unfortunately, we have occasion for a topical episode today given all the news about bank failures and bank runs over the last week. In today’s episode we discuss a handful of front of mind considerations for fund managers navigating a world in which bank runs seem more plausible. Key Points From This Episode: Diversify banking relationships. Stay informed. Do not commingle assets. Beware of scams...

Today we are diving into the SEC’s existing “Custody Rule”, and its recent proposal to update and replace the Custody Rule with a new “Safeguarding Rule”. The Custody Rule applies to registered investment advisers that have custody of client assets. The newly proposed Safeguarding Rule would apply similarly but make important and specific updates and changes, notably among them, applying the rule...

Today we are talking about how to structure your new fund vehicle, starting with two crucial questions you need to answer before making any structuring determinations: 1) what is your fund investing in? and 2) Who is investing in your fund? Key Points From This Episode: Making sense of the myriad names for private funds: hedge fund, venture capital fund, private equity fund, evergreen fund, open-e...

One of the top questions I get from aspiring digital asset fund managers is: How do I access non-US exchanges or token projects that bar US person participation? Unfortunately, the unsatisfying answer is: it depends!  There are myriad potential solutions to this problem, but the extent to which any of them might work for you depends on many factors. Key Points From This Episode:  Why certain non-U...

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...

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...

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 rem...

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 H...

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.  Wh...

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 regulati...

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 mai...