Media Mentions
Schulte co-managing partner Marc Elovitz quoted in The National Law Journal
August 2, 2024
Last month, the US Court of Appeals for the Fifth Circuit vacated the SEC’s rule regulating private fund advisers, stating that the agency overstepped its statutory authority. The SEC's window for requesting an appeal has expired and the court issued a mandate.
Schulte Roth & Zabel co-managing partner Marc Elovitz offered his perspective on the US Securities and Exchange Commission’s next course of action in The National Law Journal article titled, “SEC Will Keep Examining, Enforcing Private Fund Advisers' Actions Despite Vacated Rule, Securities Lawyers Say.”
Marc described the rule as “effectively over and done with in this incarnation,” but noted that the SEC’s examination and enforcement of private fund advisers is still very active, stating, “We are absolutely aware that the SEC, in its examination and enforcement program, will continue to focus on expenses and fees and make efforts to carefully evaluate those issues.”
The private fund adviser rule’s quarterly reporting component is a potential provision the agency could restore as it “could be viewed as a type of disclosure requirement that is not unfamiliar in the securities laws,” explained Marc.
“The Fifth Circuit didn’t think that the SEC had laid the groundwork for the rulemaking. So, if they were going to do that, they would need to lay the groundwork that would provide a sufficient basis for rulemaking with respect to quarterly reporting,” he added.
However, Marc clarified that it is unlikely that the SEC will petition the Supreme Court to overturn the Fifth Circuit’s decision.
“It was a bad ruling for the SEC, both in terms of the private fund advisers rules themselves, but also for the holding about the SEC’s authority under the [Investment] Advisers Act, which could influence other rules of the SEC, both existing rules, proposed rules and future rules. So to double down on that issue and take it to the Supreme Court and potentially get a precedent of the Supreme Court as to their authority under the Advisers Act would be highly, highly risky.”
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Alerts
On July 24, 2024, the US Department of Treasury's Financial Crimes Enforcement Network (“FinCEN”) issued updates to its Frequently Asked Questions (“FAQs”) [1] regarding the beneficial ownership information (“BOI”) reporting requirements of the Corporate Transparency Act (collectively, with its implementing regulations, the “CTA”).[2] These FAQs provide (i) clarity on the type of taxpayer identification number (“TIN”) information required to be reported by an entity that is disregarded as an entity that is separate from its sole tax owner for US federal tax purposes (“DRE”) and (ii) relief to certain types of entities relating to this TIN reporting obligation.
Alerts
The recently enacted Corporate Transparency Act (“CTA”) establishes mandatory federal reporting requirements for any legal entity registered with the secretary of state or any similar office. If you own or have management responsibility over one or more limited liability companies, limited partnerships, corporations or other similar entities or, if any trust of which you are a grantor, trustee or beneficiary owns or has management responsibility over one or more limited liability companies, limited partnerships, corporations or other similar entities, you may be subject to the new filing requirements of the CTA. For any entity created before Jan. 1, 2024, beneficial ownership reports must be filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of Treasury, by Dec. 31, 2024. A copy of the Alert we circulated on Jan. 31, 2024, outlining the key features of the CTA, can be found here. There are financial and, in some cases, criminal penalties for failure to file a report. Please reach out to us immediately if you need assistance determining whether you have to file a beneficial ownership report. We need to hear from you no later than Aug. 31, 2024, to be able to provide timely assistance on this matter.
Alerts
On July 24, 2024, the US Department of Treasury's Financial Crimes Enforcement Network (“FinCEN”) issued updates to its Frequently Asked Questions (“FAQs”) [1] regarding the beneficial ownership information (“BOI”) reporting requirements of the Corporate Transparency Act (collectively, with its implementing regulations, the “CTA”).[2] These FAQs provide (i) clarity on the type of taxpayer identification number (“TIN”) information required to be reported by an entity that is disregarded as an entity that is separate from its sole tax owner for US federal tax purposes (“DRE”) and (ii) relief to certain types of entities relating to this TIN reporting obligation.
Alerts
The recently enacted Corporate Transparency Act (“CTA”) establishes mandatory federal reporting requirements for any legal entity registered with the secretary of state or any similar office. If you own or have management responsibility over one or more limited liability companies, limited partnerships, corporations or other similar entities or, if any trust of which you are a grantor, trustee or beneficiary owns or has management responsibility over one or more limited liability companies, limited partnerships, corporations or other similar entities, you may be subject to the new filing requirements of the CTA. For any entity created before Jan. 1, 2024, beneficial ownership reports must be filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of Treasury, by Dec. 31, 2024. A copy of the Alert we circulated on Jan. 31, 2024, outlining the key features of the CTA, can be found here. There are financial and, in some cases, criminal penalties for failure to file a report. Please reach out to us immediately if you need assistance determining whether you have to file a beneficial ownership report. We need to hear from you no later than Aug. 31, 2024, to be able to provide timely assistance on this matter.
Alerts
On July 24, 2024, the US Department of Treasury's Financial Crimes Enforcement Network (“FinCEN”) issued updates to its Frequently Asked Questions (“FAQs”) [1] regarding the beneficial ownership information (“BOI”) reporting requirements of the Corporate Transparency Act (collectively, with its implementing regulations, the “CTA”).[2] These FAQs provide (i) clarity on the type of taxpayer identification number (“TIN”) information required to be reported by an entity that is disregarded as an entity that is separate from its sole tax owner for US federal tax purposes (“DRE”) and (ii) relief to certain types of entities relating to this TIN reporting obligation.