On April 5, 2021, the Financial Crimes Enforcement Network (“FinCEN”) released its advance notice of proposed rulemaking (“ANPRM”) to solicit public comments on questions pertinent to its implementation of the Corporate Transparency Act’s (“CTA”) beneficial owner reporting requirements. As discussed in a previous Energy Law Blog post, the CTA was adopted as part of the 2021 National Defense Authorization Act and requires that certain business entities disclose to FinCEN the identities of their beneficial owners and applicants. The information will then be stored in a secure, private database that may be accessed by, among others, law enforcement agencies for crime prevention and certain financial institutions for customer due diligence purposes. FinCEN has until January 1, 2022, to implement the regulations regarding reporting requirements, although FinCEN is also using this ANPRM to solicit comments on the implementation of the related database maintenance use and disclosure provisions. Final rules on customer due diligence requirements for financial institutions will be the subject of separate rulemaking and comment periods.
The Corporate Transparency Act, adopted as part of the 2021 National Defense Authorization Act (the “Act”), will require certain business entities (defined as “reporting companies”) to disclose to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) the identities of their beneficial owners and applicants. FinCEN will use these disclosures to create a…
Yesterday the U.S. Securities and Exchange Commission adopted final rules that amend the definitions of “accredited investor” and “qualified institutional buyer” which are central to classifying investors that may participate in private offerings and investments under federal securities laws.
A company wishing to offer or sell securities to the public must register those securities with the SEC unless an exemption from registration is available under federal securities laws. The registration process is intended to protect investors by providing regulatory oversight and requiring the public disclosure of key information about the offered securities, but it is often lengthy and costly. As an alternative, many companies seek to raise capital with unregistered securities pursuant to an available exemption.…
Continue Reading SEC Expands Investor Classes for Unregistered Securities Transactions
In addition to the SBA’s Payment Protection Program (PPP) and Economic Injury Disaster Loans (EIDL), on April 9, 2020, the Federal Reserve announced that it was going to provide up to $2.3 trillion in loans to support the economy through various programs, including the Main Street Lending Program (“MSLP”). The MSLP will support credit flow to small and mid-sized businesses by providing support to businesses that were in good financial standing prior to the COVID-19 crisis. This is a new loan program authorized by the CARES Act. We will continue to update this summary as more information becomes available.
The Coronavirus Pandemic has wreaked havoc on small and mid-sized businesses (“SMBs”) throughout Texas and the rest of our country. Many SMBs have had to close their doors due to mandatory stay-at-home orders and other social distancing orders and requirements. The CARES Act and other recent legislation passed by Congress and signed into law by President Trump contain several programs designed to assist these businesses in their efforts to make it through the hardships of the next several months. But what about the longer-term capital needs for SMBs as the pandemic subsides and these businesses emerge from the mandatory stay-at-home and other orders and begin to move forward again?
The SEC announced on March 25, 2020 additional regulatory relief for investment advisers impacted by the Coronavirus. The SEC extended relief from May 15 until June 30, 2020 for filing an amendment to Form ADV Part 1A and the Brochure (ADV Part 2A) and related delivery obligations. https://www.sec.gov/rules/other/2020/ia-5469.pdf. The annual amendments for ADV are normally due March 30, 2020 for most firms. The SEC originally extended these deadlines in an order issued March 13, 2020. In the new order, the SEC also relaxed the requirements for qualifying for the extension. Under the new rule, the adviser no longer has to give an estimated date of compliance or to explain the circumstances of the delay.
Delaware corporations routinely include “exclusive federal forum” provisions in their charters and bylaws to designate federal courts as the exclusive forum for litigating claims under the Securities Act of 1933 (the “’33 Act”). Corporations generally prefer to litigate these claims in federal court as state court is viewed as inefficient and more inclined to grant plaintiffs a summary judgment ruling. The practice of adopting exclusive forum provisions is intended to avoid state court litigation of ’33 Act claims and state court forum shopping by plaintiffs.…
Continue Reading Delaware Corporations Can Rely On Federal Forum Provisions for ’33 Act Claims
The SEC announced on March 13, 2020 that investment advisers affected by Coronavirus are exempted from filing an amendment to Form ADV Part 1A and the Brochure (ADV Part 2A) for up to 45 days. https://www.sec.gov/rules/other/2020/ia-5463.pdf. The annual amendments for ADV are due March 30, 2020 for most firms. In addition, the SEC exempted advisers affected by Coronavirus from the requirements to deliver amended brochures, brochure supplements or summary of material changes to clients where the disclosures are not able to be timely delivered because of circumstances related to Coronavirus.
The annual amendment for ADV Parts 1A (and 1B for state-registered advisers) and the Brochure (ADV Part 2A) is due March 30, 2020 (for firms with year-end fiscal years). These must be filed with the SEC and with the State of Louisiana (or other state[s] of registration) through the IARD. There is no annual amendment required for the Brochure Supplement (Part 2B). However, you should amend the Brochure Supplement, as well as the other ADV Sections, when it becomes materially inaccurate (some items in the ADV, such as changes in assets under management, do not require interim amendments).
If there is a material change to your Brochure (ADV Part 2A) from the last annual update, you are required to deliver the updated brochure to your clients within 120 days of the end of your fiscal year-end. You are also required to promptly deliver to your clients an updated Brochure Supplement if there is updated disciplinary information.
Top 10 Louisiana Advisers
For this edition, I thought that we would look at the top ten SEC registered investment advisers within the State of Louisiana. The SEC publishes a comprehensive database that captures all information submitted by advisers in their Form ADV’s. There is a total of 55 advisers registered with the SEC in Louisiana. Using this data, we came up with a list of the top Louisiana registered investment advisers by assets under management (“AUM”) and by number of accounts. For purposes of these rankings, we excluded advisers that are: (i) headquartered out of state, (ii) did not provide advisory services to the public, or (iii) umbrella organizations for groups of unaffiliated advisers. For the ranking of advisers by number of accounts, we included a column showing the percentage of accounts that are held by individuals, who are not high net worth individuals (net worth >$2.1 million).
There is a lot of data that we did not publish. Let us know if there is a data summary that you would like to see.