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Private Funds

To start and manage a private fund, you must consider market trends, regulations, securities laws, etc. Without the right insight and strategy, your private fund could collapse, causing you to lose your clients’ money while harming your reputation.
My RIA Lawyer is experienced in establishing, registering, and managing private funds.

Reach out to our private investment funds lawyer today to find out how we can help you with each step, from forming the fund to raising capital, ensuring compliance, preparing contracts, and more. While some firms step aside after forming the fund, we can serve as your partner.

What is a Private Fund?

A private fund is an investment vehicle that caters to a select group of sophisticated investors, allowing them to invest in various assets and asset classes. Private funds play a pivotal role in finance, providing access to a broad range of investment strategies and alternative investment opportunities that may not be readily available to retail investors.

Private funds encompass a diverse array of investment structures. These funds are managed by fund sponsors or general partner entities, which are responsible for designing and executing investment strategies in line with the fund’s business objectives.

What Sets Them Apart

One key distinction of private funds is that they operate under exemptions from certain federal securities laws, such as the Investment Company Act, which allows them to work closely with a limited number of investors, often referred to as limited partners.

These funds are typically formed by investment advisers who guide the fund formation process, including due diligence, deal terms negotiation, and structuring special purpose vehicles if necessary.

Private funds serve as a means for institutional investors, accredited investors, and high-net-worth individuals to diversify their portfolios across a full spectrum of investment opportunities.

These funds cater to various asset classes, from traditional ones like stocks and bonds to more specialized areas like real estate and private equity. Private funds often engage in fund restructurings, secondary market activities, and even tender offers, enhancing their investment strategies to adapt to market trends and regulatory issues.

Types of Private Funds

Our private investment funds lawyer helps firms establish and register various types of private funds. Our practice areas include:

  • Hedge funds: Investment pools that aim to generate high returns through various strategies, often involving complex financial instruments.
  • Private equity funds: Funds that invest in private companies to acquire, improve, and eventually sell them for profit.
  • Venture capital funds: Funds that provide capital and support to startups and early-stage companies in exchange for equity.
  • ESG funds: Environmental, Social, and Governance funds that prioritize investments aligned with ethical and sustainable principles.
  • Offshore funds: Investment vehicles established in foreign jurisdictions, often for tax benefits and regulatory flexibility.
  • BDCs (Business Development Companies): Publicly traded firms that invest in and provide financing to small and mid-sized businesses.
  • Real estate funds: Investment funds focused on acquiring and managing real estate properties for returns.
  • CPOs (Commodity Pool Operators): Entities that manage and operate investment funds focused on trading commodities and derivatives.

This isn’t an all-inclusive list of our practice funds. If your fund isn’t listed, please contact us for more information.

How to Start a Private Equity Fund

Private equity and investment companies are typically in charge of managing investments from businesses. Having a private funds lawyer is valuable when establishing and managing these funds.

First, the private investment funds lawyer can help the client raise necessary funds through partnership agreements. Once the funds are raised, the lawyer will form the fund by creating organizational documents, regulatory filings, and more.

Then, the private investment funds lawyer will ensure that all partners understand the regulatory requirements of the fund. Staying compliant is one of the most important aspects of managing a private fund. Even a small oversight can lead to an investigation, fines, and sanctions, so this information is crucial.

Legal Support for Private Funds

Ongoing legal support is necessary, regardless of the type of private fund. The attorney will review all promotional materials for the private fund, ensuring that each document meets legal guidelines.

The attorney can also answer investor questions on behalf of the business while being on hand to answer operational and structural questions for the firm. In addition, the lawyer can prepare amendments and side letters as needed and help managers modify the funds.

The private funds lawyer can also vet potential investors. After an evaluation, the lawyer can inform the manager if the investor is eligible or poses a risk to the fund.

Private Funds and Marketing Restrictions

Regulation D of the Securities Act provides a safe harbor from the standard registration requirement for private funds. To qualify for safe harbor, the fund cannot use general advertising or solicitation to sell securities.

Private fund managers must follow guidelines for all publications, targeted communications, and conference information. Also, the fund’s website has to comply with all guidelines. A private funds lawyer will review all communication to ensure they meet the regulations. If not, the attorney can create a strategy to get the communications into compliance.

The SEC and Private Investment Funds

The SEC monitors private funds, looking for violations. If it believes that a violation has occurred, it will initiate an investigation and hand out penalties. Often, the penalties include $1 million or more in fines. Violations are often related to conflicts of interest, marketing materials, and a failure to disclose fees and expenses.

A private funds lawyer will review your fund to ensure its compliance and can help you address any issues. With the help of a lawyer, you will stay within the law while managing your private fund. Contact us today for a consultation.

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We get it – you need answers, and you need them now. That’s where we come in, offering a blend of big-firm resources with the kind of personal attention you’d expect from a smaller one.

But what really sets us apart? We’re all about your success. Compliance is just the start; we’re here to help you thrive. We know the ins and outs of the financial world, and we’re not afraid to think outside the box to help you reach your goals while playing by the rules.

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