registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. §78l); or (ii) the entity is required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78o).U.S. governmental authority (Exemption #2)—Any entity qualifies for this exemption if both of the following criteria apply: (i) the entity is established under the laws of the United States, an Indian Tribe, a State, or political subdivision of a State, or under an interstate compact between two or more States, and (ii) the entity exercises governmental authority on behalf of the United States or any such Indian tribe, State, or political subdivision.Bank (Exemption #3)—An entity qualifies for this exemption if any of the following three criteria apply: (i) the entity is a “bank” as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. §1813), (ii) the entity is a “bank” as defined in section 2(a) of the Investment Company Act of 1940 (15 U.S.C. §80a-2); or(iii) the entity is a “bank” as defined in section 202(a) of the Investment Advisors Act (15 U.S.C. § 80b-2).Credit Union (Exemption #4)—An entity qualifies for this exemption if any of the following two criteria apply: (i) the entity is a “Federal credit union” as defined in section 101 of the Federal Credit Union Act (12 U.S.C. §1752), or (ii) the entity is a “State credit union” as defined in section 101 of the Federal Credit Union Act (12 U.S.C. §1752).Depository institution holding company (Exemption #5)—An entity qualifies for this exemption if either of the following two criteria apply: (i) the entity is a “bank holding company” as defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. §1841), or (ii) the entity is a “savings and loan holding company” as defined in section 10(a) of the Home Owners’ Loan Act (12 U.S.C. §1467a).Money transmitting business (Exemption # 6)—An entity qualifies for this exemption if either of the following two criteria apply: (i)

istered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. § 78l); or (ii) the entity is required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o).U.S. governmental authority (Exemption #2)—Any entity qualifies for this exemption if both of the following criteria apply: (i) the entity is established under the laws of the United States, an Indian Tribe, a State, or political subdivision of a State, or under an interstate compact between two or more States, and (ii) the entity exercises governmental authority on behalf of the United States or any such Indian tribe, State, or political subdivision.Bank (Exemption #3)—An entity qualifies for this exemption if any of the following three criteria apply: (i) the entity is a “bank” as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. § 1813), (ii) the entity is a “bank” as defined in section 2(a) of the Investment Company Act of 1940 (15 U.S.C. § 80a-2); or (iii) the entity is a “bank” as defined in section 202(a) of the Investment Advisors Act (15 U.S.C. § 80b-2).Credit Union (Exemption #4)—An entity qualifies for this exemption if any of the following two criteria apply: (i) the entity is a “Federal credit union” as defined in section 101 of the Federal Credit Union Act (12 U.S.C. § 1752), or (ii) the entity is a “State credit union” as defined in section 101 of the Federal Credit Union Act (12 U.S.C. § 1752).Depository institution holding company (Exemption #5)—An entity qualifies for this exemption if either of the following two criteria apply: (i) the entity is a “bank holding company” as defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. § 1841), or (ii) the entity is a “savings and loan holding company” as defined in section 10(a) of the Home Owners’ Loan Act (12 U.S.C. § 1467a).Money transmitting business (Exemption # 6)—An entity qualifies for this exemption if either of the following two criteria apply

time; reviewed thousands of pages of documents; interviewed ten witnesses; met with [Plaintiff]; and asked [her] for any relevant documents,” culminating in a 96-page report recommending the rejection of Plaintiff’s demand. According to the Court, Plaintiff’s challenges to the good faith and reasonableness of the investigation were unconvincing and contradicted by this record, such that she could not rebut the Board’s business judgment.ConclusionThis decision represents a positive result for fund boards, as it validates the role of disinterested members in making determinations concerning litigation and the deference granted under the business judgment doctrine. The Court’s ruling also serves as a clarifying authority for board member independence standards with respect to funds organized under Massachusetts law that are also registered under the ICA.1Lanotte v. Highland Cap. Mgmt. Fund Advisors, L.P., et al., No. 20-10649, 2023 WL 2663276 (5th Cir. March 28, 2023).2Id. at *3 (quoting 15 U.S.C. §§ 80a-2(a)(19)(A)(i)-(iii), (B)(i)-(ii)).3 Id. (quoting 15 U.S.C. § 80a-2(a)(9)).

See 17 CFR 275.203(m)-1(d)(5).Section 3(c)(1) exempts from the definition of investment company any issuer: Whose securities are not owned by more than 100 persons, andWhich does not make or plan to make a public offering of securitiesSection 3(c)(7) exempts from the definition of investment company any issuer: Whose private securities are owned "exclusively" by "qualified purchasers.""Qualified purchaser" means:A natural person who owns not less than $5 million in investmentsA company that owns not less than $5 million in investments and is owned directly or indirectly by 2 or more natural persons that are relatedA trust not formed to acquire the offered securities, and the trustee and each settlor meet the requirements of subsections (i), (ii), or (iv)A person who acts for his own account and accounts of other qualified purchasers on a discretionary basis who in the aggregate own not less than $25 million in investments [See 15 USC 80a-2(a)(51)(A)]Michigan Securities Rule 4.5: Registration Exemption for Investment AdvisersBecause most advisers will likely seek exemption for "3(c)(1) Funds," as defined in the Securities Rules, the analysis below will outline the registration exemption analysis for advisers to a "3(c)(1) Fund" that is not a "venture capital fund" as defined by the Michigan Securities and SEC Rules. An analysis for a venture capital fund registration exemption will be slightly different.A "private fund adviser" that advises at least one "3(c)(1) Fund" must meet five elements, with some exceptions noted below, to quality for a Michigan registration exemption:Neither the private fund adviser nor its affiliates have been disqualified under SEC Regulation D.The private fund adviser files a Form ADV for exempt advisers pursuant to SEC Rule 204-4, 17 CFR 275.204-4, with the Investment Adviser Registration Depository (IARD)The private fund adviser advises private funds that are beneficially owned entirely by "qualified c

targeted returns by restricting their use only in specified scenarios involving institutional investors or [qualified purchasers], well-established categories of persons that have been previously determined to be financially sophisticated or able to engage expertise for purposes of the securities laws.”The partial amendment did not alter FINRA’s proposed effectiveness time; therefore, within 45 days of the date of publication of the amendment in the Federal Register or within such longer period as the SEC may designate, the revised Communications with the Public Rule will become effective. It is likely that the SEC staff will make a public interest finding and approve FINRA’s proposed rule filings. The exempt offerings fall under FINRA Rules 5122 (Member Private Offerings) and 5123 (Private Placement Offerings). Defined by FINRA Rule 2210(b)(3).See FINRA Rule 2210(d)(1)(f).See 82482 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023.See FINRA Rules 2210(a) and 4512(c).See 15 U.S.C. 80a–2(a)(51)(A).See 82482 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023.See 82482 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023, e.g., Privately Offered Investment Companies, Investment Company Act Release No. 22597 (April 3, 1997), 62 FR 17512 (April 9, 1997) (adopting rules to implement a legislative exclusion from regulation under section 3(c)(7) of the Investment Company Act for privately offered investment companies “whose investors are all highly sophisticated investors, termed ‘qualified purchasers’”).[View source.]

lude:Publicly Traded Companies/Reporting Securities Issuers: Exemption: Companies that are already subject to substantial reporting requirements under federal securities laws are generally exempt from the CTA reporting requirements.Example: Publicly traded companies listed on stock exchanges, such as the New York Stock Exchange (NYSE) or NASDAQ, are typically exempt because they already disclose detailed ownership and financial information to the Securities and Exchange Commission (SEC) and the public.Government Entities: Exemption: Entities owned or controlled by a federal, state, local, or tribal government are generally exempt from reporting.Example: Government agencies, enterprises, or instrumentalities are exempt, recognizing that these entities are subject to a different set of transparency and accountability mechanisms.Banks:Exemption: Any bank as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), section 29a) of het Investment Company Act of 1940 (15 U.S.C. 80a-2(a)), or section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)).Example: Federal and state registered banks which are already subject to strict regulatory oversight and reporting requirements under the Bank Secrecy Act.Credit Unions: Exemption: Any federal or state credit unions defined under section 101 of the Federal Credit Union Act.Example: Federal and state credit unions which already report extensive business information including information related to anti-money laundering and know-your-customer obligations.Depository Institution Holding Company: Exemption: Any bank holding company as defined in section 2 of the Bank Holding Company Act of 1956, or any savings and loan company as defined in section 10(a) of the Home Owners’ Loan Act.Example: Financial services companies that operate as a holding company for various subsidiaries including bank and control a range of financial services through its subsidiaries. These kinds of entities are also exempt as they di

imitations of using the projected performance or targeted return in making investment decisions, including reasons why the projected performance or targeted return might differ from actual performance.”Request for CommentsWe anticipate comments from industry participants requesting additional clarity with respect to the application of the proposed amendment, and we hope changes will be made to the Proposal that will reduce the compliance burden. For example, the requirement that the member adopt and implement written policies and procedures “reasonably designed to ensure that the communication is relevant to the likely financial situation and investment objectives of the investor” seems to us unnecessarily burdensome and could be removed when taking into account (1) that the material is only used with institutional investors and QPs, and (2) the independent suitability requirements of FINRA Rule 2111 and SEC Reg BI. All comments related to this Proposal are due by December 15, 2023.[] 15 USC § 80a-2(a)(51).[] 17 CFR § 275.206(4)-1.[] FINRA Rule 2210 (d)(1)(F)(iv)(A).[] 17 CFR § 275.206(4)-1(d)(6).[] FINRA Interpretive Letter to Budge Collins, Collins Bay/Island Securities, Sept. 14, 2004. (“By restricting the dissemination of such information to QIBs, there is the possibility that those potential investors who qualify as QIBs will be treated differently than other potential investors and will have access to information that is not available to others.”)[View source.]

lidated, the CTA contains no similar specification for employee headcount." Prior to this statement, FinCEN stated more generally that "the 'full-time employee' factor expresses well-known and well-established general business tax principles and should not require further elaboration." The point here is that the determination as to whether a particular exemption applies, especially at this early stage of the CTA's implementation, needs to be approached carefully to avoid certain interpretations that, perhaps even if intuitive, are inconsistent with the language of the regulation, especially considering FinCEN's own commentary. Here, simply because gross receipts may be based on a consolidated filing does not necessarily reflect how the number of employees may be calculated, which is based upon a definition included in another regulation.In another example, the exemption for "Insurance company" reads: "Any insurance company as defined in Section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a-2)." Now while one would be wise to review Section 2 of the Investment Company Act of 1940 in general when considering the applicability for this exemption, consider the following commentary discussed by FinCEN in connection with its Final Rule in connection with this exemption. It noted that it received a comment claiming that the definition of "Insurance company" was too broad and could conceivably include captive insurance companies. Captive insurance companies are often used by businesses to self-insure by creating a wholly owned subsidiary of the insured entity which acts as the insurer thereby allowing the insured to underwrite its own insurance (along with other benefits). This commenter expressed concern that captive insurance companies were "high-risk" and that the broad language could enable these entities to avoid scrutiny under the CTA. Without addressing why the possibly "high-risk" aspect of a captive is relevant to the CTA's purpose, FinCEN rejected the idea of modifying

r section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o); An exchange or clearing agency (as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c)) that is registered under section 6 or 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78fand 78q–1); An investment company (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) or an investment adviser (as defined in section 202(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(11))), if the company or adviser is registered with the Securities and Exchange Commission, has filed an application for registration which has not been denied, under the Investment Company Act of 1940 (15 U.S.C. 80a–1et seq.) or the Investment Adviser Act of 1940 (15 U.S.C. 80b–1et seq.), or is an investment adviser described under section 203(l) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3(l)); An insurance company (as defined in section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a–2); A registered entity (as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)), or a futures commission merchant, introducing broker, commodity pool operator, or commodity trading advisor (as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)) that is registered with the Commodity Futures Trading Commission; A public accounting firm registered in accordance with section 102 of the Sarbanes-Oxley Act (15 U.S.C. 7212) or an entity controlling, controlled by, or under common control of such a firm; A public utility that provides telecommunications service, electrical power, natural gas, or water and sewer services, within the United States; A church, charity, nonprofit entity, or other organization that is described in section 501(c), 527, or 4947(a)(1) of the Internal Revenue Code of 1986, that has not been denied tax exempt status, and that has filed the most recently due annual information return with the Internal Revenue Service, if required to file such

A is that the statute provides broad authorization for FinCEN to disclose the information it collects to other state and federal agencies. FinCEN plans to make rules concerning access to the information and related safeguards, but those rules have not yet been issued.A full discussion of the final rules is beyond the scope of this article, but below are what we feel are some key observations from the perspective of families with family offices and substantial assets in trust.PTC as an Exempt Entity Consistent with the statute, the final rules provide for a total of 23 categories of exempt entities that are not considered “reporting companies.” An exemption is expressly provided for banks as such term is defined in various other laws, including the Investment Company Act of 1940 (‘40 Act). In general, a PTC that is supervised and examined by a state banking authority is considered a “bank” under the ‘40 Act and, as such, would be excluded from the definition of reporting companies (See 15 U.S. Code § 80a–2(a)(5)). This means that the PTC, itself, would not be required to file any reports pursuant to the CTA. In contrast, a traditional family office entity is not excluded from the definition of reporting company for purposes of the CTA and therefore the ownership of the family office must be reported to FinCEN in compliance with the CTA, unless another exemption applies. For example, another broad exemption applies generally to any “large operating company,” meaning an entity with 20 full time US employees, a physical office in the US, and $5 million of gross receipts for the previous year.Ownership and Control of Trust Assets The final rules provide that an individual will be deemed to have control or ownership of trust assets if the individual is serving as trustee or otherwise has the authority to dispose of trust property. In addition, a trust beneficiary who is the sole permissible recipient of trust income and principal, or who has authority to withdrawal trust assets, will be deemed to