Private Investment Funds Partner Discusses SEC Guidance on Application of Custody Rule to SPVs in Compliance Intelligence

In The News
July 11, 2014

Private investment funds partner Jason E. Brown (Boston) is quoted in a Compliance Intelligence article concerning new SEC guidance on the application of the custody rule to special purpose vehicles and the uncertainty faced by private fund advisers as they make efforts to comply with the rule. Jason notes, “While the new guidance affirms many of the assumptions that had been made regarding how to treat SPVs under the custody rule, it doesn't answer many of the questions that we’ve been thinking about since private equity firms first had to register.” He also remarks, “The other big issue is that there’s no guidance on when to treat SPVs as a client or not, which is probably the biggest unanswered question. In these very complex structures, where there could be multiple vehicles between the fund and the portfolio company, it's unclear how far down the chain of SPVs you need to go with ensuring custody rule compliance.”