Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community

CategoryFund Formation

Alert to Broker-Dealers and Hedge Funds: SEC Charges Broker-Dealer with Naked Short-Selling Violations

On May 19, 2021, the Securities and Exchange Commission (“SEC”) charged a broker-dealer, BTIG, LLC (“BTIG”), with repeatedly violating the (i) order-marking and (ii) locate provisions of Regulation SHO, in connection with more than 90 sale orders from a single hedge fund customer.  Regulation SHO regulates short sales of securities and is aimed, in large part, at reducing...

Latest News on ESG Regulations and Investing

Environmental, social and governance (ESG) factors have become a key discussion point in the asset  management industry, with many managers incorporating ESG considerations into the investment processes.  In 2019, ESG investment funds increased by $70 billion while traditional equity funds saw an outflow of $200 billion.  ESG investments continue to increase in comparison to “traditional” equity...

SEC Statement on Accounting for Warrants in SPAC IPOs is Causing Some Hands to Wring

On April 12, 2021, the Securities and Exchange Commission (SEC) released a new interpretation, without notice or a comment period, which calls into question whether warrants issued by special purpose acquisition companies (SPACs) could continue to be considered equity instrument.  The SEC’s new interpretation reveals a position that is contrary to widespread practice of classifying warrants...

IRS Guidance Provides Flexibility for Disaster-Related Extension of OZ Working Capital Safe Harbor

The Internal Revenue Service (IRS) will publish in April 14, 2021’s Federal Register a notice of proposed rulemaking for the opportunity zones (OZ) incentive that provides flexibility in the 24-month extension of the working capital safe harbor in the case of federally declared disaster areas. The proposed rule that would also provide requirements that certain foreign persons and certain...

New Regulation Crowdfunding Rules Come into Effect

In 2012, the Jumpstart Our Business Startups (“JOBS”) Act introduced Regulation Crowdfunding (“Reg CF”) to the regulatory framework governing exempt offerings, enabling eligible companies to offer and sell securities through crowdfunding.  The JOBS Act was created to ease securities regulations and to encourage the private funding of U.S. small businesses by reducing costs associated with the...

Bi-Partisan Legislation Introduced to Extend OZ Investment Period to 2028

House of Representatives Propose Legislation to Extend the Opportunity Zone Tax Deferral for Two Additional years. The Opportunity Zones Extension Act would extend the capital gains tax deferral date to permit the deferral of capital gains until the end of 2028. This Bi-Partisan legislation is intended to attract additional private sector investment in underserved communities. Rimon Law has an...

Taxation of Carried Interests is Reignited by Recent Congressional Bill

Representatives Bill Pascrell (D-NJ), Andy Levin (D-MI) and Katie Porter (D-CA) released H.R. 1068[1] on February 16, 2021, known as the “Carried Interest Fairness Act” (the “Act”).  The Carried Interest Fairness Act would tax carried interest compensation at ordinary income tax rates and treating it as wage income subject to employment taxes.  Capital gains taxation would still apply to general...

IRS Notice Extends Several Opportunity Zone Investment Deadlines

The Internal Revenue Service (IRS) issued Notice 2021-10 on January 19, 2021 that extends several deadlines related to investments in qualified opportunity zones (QOZ) and by qualified opportunity funds (QOFs). 180-Day Window Extended.  Of particular importance, Notice 2021-10 provides an extension to taxpayers’ 180 day reinvestment window in QOFs due to the COVID-19 pandemic.  Henceforth...

2020 in the Rear-View Mirror:  Key Takeaways Applicable to Private Investment Funds and Private Offerings

In 2020, the Securities and Exchange Commission (SEC) renewed its focus on private investment funds while easing limits on private placements generally.  As the SEC observes, private fundraising easily surpasses public fundraising including with respect to private investment funds.  The following discussion recaps a few of the key developments affecting private offerings, private funds and...

EB-5 Regional Center Program Extended Through June 30, 2021

The EB-5 Regional Center Program will be extended through June 30, 2021 as part of the Consolidated Appropriations Act, 2021. This legislation does not address the EB-5 per-country-caps limit or other major reform issues that had been raised just a short time ago in Congress but separates EB-5 Regional Center Program reauthorization from future federal spending (appropriations) bills by making...

Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community