Private Equity and Hedge Funds: Regulatory Analysis and ......hedge funds are free to develop their own redemption rules. Typically, these take the form of “lock-up” provisions

PrivateEquityandHedgeFunds:RegulatoryAnalysisandStructuralOverview

ErnestE.Badway,Esq.Partner212.878.7986|[email protected]

JoshuaHorn,[email protected]

BenjaminH.McCoy,[email protected]

Private Equity and Hedge Funds: Regulatory Analysis and Structural Overview

2 ©2019FoxRothschildLLP

AtFoxRothschildLLP,wehaveawealthofexperienceincreatingandformingprivateequityandhedgefunds.Overtheyears,ourstrategyhasbeentoworkwithourclientstodeveloptheseentitieswhilealsoassistingthemintheirongoingbusinessoperations.Asaresultofthebreadthofourexperience,wehaveproducedthishandbookasareferenceguideforallthosewhoareinterestedinthisexcitingfield,frompotentialentrantstothosewhomaybemoreestablishedandneedaquickreferenceguide.

Anticipatingyourinterestinthesefundofferings,thefollowingismeanttoprovideasummaryofthemostcommoncompliance-relatedissuesthatprivateequityand/orhedgefundsface.Ofcourse,everyissuethatyoumayencounterinraisingcapitalisnotcovered.Therefore,ifanissueshouldarise,wesuggestthatyoucontactuswithanyquestionsorconcerns.Pleasekeepinmindthatanydeviationfromthecurrentstatutoryandregulatorystructure(primarilybasedinexemptionsandexceptionstoprovisionsoftheSecuritiesActof1933,theSecuritiesExchangeActof1934,theInvestmentAdvisersActof1940andtheInvestmentCompanyActof1940)foryourprivateequityorhedgefundcouldsubjectyouandyourassociatestosignificantliability.

Thishandbookhasbeenpreparedintwoparts.Thefirstpartprovidesasummaryofregulatoryissuesaffectinghedgefundformationandoperation.Thesecondpartcontainsageneric“SummaryofTerms,”similartowhatwouldbeincorporatedwithinatypicalprivateplacementmemorandum.Inthe“SummaryofTerms,”wehavetriedtoidentifythetypesofissuesthatwouldberelevantforyouasastart-upfundandasabaselinefordiscussionandmodification.*

*Thishandbookhasbeenpreparedforinternaluseonlyasagenericsummaryguidelineoftheregulatoryissuesaffectingprivateequityandhedgefundformationandoperation.Ithasnotbeencustomizedfortheuseoftherecipientortoaddressanyspecificissuesthatmaybeparticulartotherecipient.Thismaterial,absentseparatewrittenconfirmationbyaFoxRothschildattorney,isnottoberelieduponaslegaladvice,anopinionofFoxRothschildorasacurrentstatementofthelaw.Further,thishandbookremainsthepropertyofFoxRothschildandisnottobereproducedorprovidedtoanythirdparty.



Section1:RegulatoryAnalysisPrivateEquityandHedgeFunds:Definitions

Withintheprivateequityfundarena,therearevariouswell-recognizedcategoriesofprivateequityfunds.Thosefundsinclude,amongothers:venturecapitalfunds;leveragedbuyoutormerchantbankingfunds;hedgefunds;fundsoffunds;andrealestatefunds.Althoughwewillprimarilyfocusonhedgefundformation,manyoftheissuesdiscussedbelowrelatetotheothercategoriesofprivateequityfundsaswell.

Theterm"hedgefund"isnotdefinedorusedinanyfederalsecuritieslaw.Infact,theverycreationandexistenceofhedgefundsareprimarilydesignedtooperateoutsidetheregulatoryrequirementsthatusuallygoverninvestmentcompanies.Thus,thetermhedgefundismoreamorphous,usedtodescribe:aprivatelyorganized,pooledinvestmentvehiclemanagedbyaprofessionalinvestmentmanagerthatoftenengagesinactivetradingineitheragroupofsecuritiesorcommodities,includingequities,governmentsecurities,municipalsecurities,futures,optionsandforeigncurrencies.Hedgefundsusuallyemploysophisticatedinvestmenttechniques,includingarbitrage,leveragingandhedging.HedgefundsaregenerallyneitherregisteredundertheSecuritiesActof1933asamended(“SecuritiesAct”),northeInvestmentCompanyActof1940asamended(“CompanyAct”).



Organization

Privateequityandhedgefundsaretypicallyorganizedasprivatelimitedpartnershipsorlimitedliabilitycompanieswithageneralpartnerormanagingmember.Inrarecircumstances,certainofthesefundsareoccasionallyregisteredwiththeUnitedStatesSecuritiesandExchangeCommission(SEC).

Investorsinthesefundspurchaseashareofthefundinreturnforafixedpercentageofthefundsprofits,minusfees.Thesefundsordinarilyrequiresignificantinvestments,restricttransferabilityofthefundinterestandlimitthetimeswhenaninvestormayredeemitsfundinterest.

Unlikemutualfunds,whicharesubjecttomandatedliquidityprovisions,privateequityandhedgefundsarefreetodeveloptheirownredemptionrules.Typically,thesetaketheformof“lock-up”provisionsthatrestricttheredemptionorsaleofsharesforanenumeratedperiodoftime.



InvestmentManagerandCompensation

Thispersonmanagesthefundandeithermakesinvestmentdecisionsorselectsthepersonwhowillmaketheinvestmentdecisions.

Thefundmanagercustomarilyearnscompensationthatistiedtotheperformanceofthefund.Thiscompensationisreferredtoasa“performancefee.”Performancefeescanrangefrom10percentto20percent,andareearnedwhenthehedgefundexperiencesapositivereturn.Thefundmanageralsoearnsfrom1percentto2percentofallassetsasanannualfee.

Performancefeecalculationsusuallyalsoincorporateahighwatermarkconceptrequiringthehedgefundmanagertomakeupanypriorun-recoupedlossesbeforeearningaperformancefeefromcurrentprofits.Somefundsalsoincorporatea"hurdlerate,"requiringthefundtoexceedacertainminimalrateofreturnbeforetheperformancefeeisassessed.

Therearevariances;anumberoffundschargesignificantlygreaterfees,assessafixedasset-basedfee,and/orpassthroughcertainexpensestotheinvestor.Feescanbeapportioneddirectlytothewithdrawalsfromthefund,ratherthanbasedonaperiodofatleast12months,asisthecasewithmutualfunds.



Investors

Mostfundsmarketfundinterestssolelytoinstitutionalinvestorsorwealthy,sophisticatedindividuals.Therearetwotypesofinvestors:accreditedinvestorsandqualifiedpurchasers.

Accreditedinvestorsaredefinedtoinclude,amongotherthings,anybank;brokerordealer;limitedliabilitycompanywithassetsinexcessof$5million;anynaturalpersonwithanindividualorjointnetworthwiththatperson’sspouseatthetimeofpurchaseexceeding$1million(excludingthevalueoftheperson’sprimaryresidenceandcertainassociateddebt);andanynaturalpersonwhoseindividualincomeisinexcessof$200,000(orjointwithaspouseinexcessof$300,000)forthetwomostrecentyears.See17C.F.R.§230.501and15U.S.C.§80b-1.Interestsinthefundmustbeofferedexclusivelytoaccreditedinvestors,asthattermisdefinedinSECSecuritiesActRule501ofRegulationD.Beadvisedthatinadditiontotheforegoing,thereareothercategoriesofinvestorsthatarealsoconsideredaccredited.PleaserefertoSECSecuritiesActRule501foracompletelistofcategoriesorcallusformoreinformation.

Overthelastfewyears,theSEC’sAdvisoryCommitteeonSmallandEmergingCompanieshasleddiscussionsaboutamendingthedefinitionofan“accreditedinvestor.”Todate,thosediscussionshaveledtomultipleproposalsthathavesoughttochangetheincomelimitsor,alternatively,toplaceinvestmentlimitsontheamountsthatcanbeinvested.Morerecently,theproposalshavesoughttoexpandthedefinitionofaccreditedinvestorstoincludeindividualsmoreknowledgeableaboutinvesting,suchasthosewhohavepassedcertainexaminations.TheSEC–whichmustreviewthedefinitioneveryfouryearspertheDodd-FrankAct–issuedareportinDecember2015seekingcomments.Asalways,wewillremainapprisedoftheseevolvingdevelopmentsandwillbeavailabletoupdateyoushouldanydefinitionalchangesbecomebinding.

Theotherformofinvestorisaqualifiedpurchaser,definedtoinclude,interalia:anynaturalpersonwhoownsatleast$5millionininvestments;afamilyownedcompanythathasmorethan$5millioninassets;andanyotherpersonwho,intheaggregate,eitherownsorinvestsatleast$25millionforitsownaccountortheaccountsofotherqualifiedpurchasers.SeeCompanyAct§2(a)(51)(A).

Regardlessofthetypeofinvestor,investorsarealsorelevantindeterminingwhetherafundcanqualifyforanexemptionfromregistrationundertheInvestmentCompanyAct.Thisisdesirableinordertoavoidthehostofregulationsthatflowfromregistration.Toqualifyforanexemption,afundmaynot:(1)bebeneficiallyownedbymorethan100people(ifsoldtoaccreditedinvestors);and(2)maynotmakeorpresentlyproposetomakeapublicofferingofitssecurities.SeeCompanyAct§3(c)(1).Alternatively,thereisnolimittothenumberofinvestorsafundmayhave(andstillqualifyforanexemption)if:(1)allinvestorsarequalifiedpurchasers;and(2)thefunddoesnotmakeorpresentlyproposetomakeapublicofferingofitssecurities.SeeCompanyAct§3(c)(7).Itfollowsthatthoseinterestedinafundmustbeevervigilantbeforeundertakingbusinessventureswithafundtoensurethatitisnotsubsumedinsomeinappropriateventuredisguisedasaprivateequityorhedgefund.



TheFundBusinessIsNot“Regulation-Less”

Although,atfirstblush,thesefundsprovideanappearancethattheindustryissomeby-productofthe“wildwest,”thereare,infact,significanthurdlestoovercomebeforegainingentryintothisworld.Therearenumerousregulatoryconsiderationswhenorganizingandoperatingadomesticfundaswellaswhenengaginginbusinesswithaprivateequityorhedgefund.Manyoftheseconsiderationsarisefromtheinterpretation,applicationandinterplayofvariousstatutes,includingtheSecuritiesAct,theSecuritiesExchangeActof1934(“ExchangeAct”),theInvestmentAdvisersActof1940("AdvisersAct")andtheCompanyAct,aswellasstateblueskylaws,theCommodityExchangeAct(“CommodityAct”)andapplicabletaxlawsandregulations.



OfferingFundstothePublicandtheSecuritiesAct

Toqualifyforexemptionfromtheregistrationrequirement,theSecuritiesActrequiresprivateequityandhedgefundsofferedintheUnitedStatestostructuretheiroffersandsalesofinterestsasprivateplacements.Consequently,thevastmajorityofthesefundsareofferedasprivateplacements,pursuanttoaSecuritiesActSection4(2)offeringexemption.TheSECandcourtsreviewseveralfactorstodetermineifanofferingispublicorprivate,includingthenumberofofferees,thesophisticationoftheofferees,thenatureoftheinformationdisseminatedandthemannerofthesolicitation.

PrivateplacementsaregenerallymadeinaccordancewithSecuritiesActRule506ofRegulationD,anonexclusivesafeharborforissuersrelyingonSecuritiesActSection4(2).SecuritiesActRule506ofRegulationDpermitssalesoffundintereststoanunlimitednumberof"accreditedinvestors.”Afundmayselltoamaximumof35non-accreditedinvestorsaswell.SecuritiesActRule506doesnotlimitthedollaramountofsecuritiesthatcanbeoffered.

Untilrecently,SecuritiesActRule502(c)ofRegulationDprohibitedoffersorsalesthroughgeneralsolicitationsorgeneraladvertising.Underthisrule,youwerenotabletousecoldcalling,advertising,massemailsorspam,websitesorothersimilarformsofpromotiontosolicitinvestors,orpromoteorsolicitinvestmentinyourhedgefund.However,onApril5,2012,theJumpstartOurBusinessStartupsActof2012(“JOBSAct”)wassignedintolawbyPresidentObama.TheJOBSActdirectedtheSECtoreviseRegulationDwithin90daysofitsenactmenttoremovetheprohibitionongeneralsolicitationsandgeneraladvertisinginofferingsandsalesmadeunderRule506,providedthatallactualbuyersareaccreditedinvestors.TocomplywiththeJOBSAct,theSECnowpermitsfundstobroadlysolicitandgenerallyadvertiseanofferingprovidedthatalltheinvestorsintheofferingareaccreditedinvestors.Itfollows,then,thatafundmaynotsellto35“non-accredited”investorswhilealsoperforminggeneraladvertising.

InevaluatingwhetherafundhascompliedwiththerequirementsforRegulationDprivateofferings,theSEClooksattherelationshipbetweentheissuerandoffereeandthemethodofsolicitationtoevaluatecompliancewiththeserequirements.TohelpestablishthatyouhavecompliedwiththerequirementsofSECRegulationD,wegenerallyrecommendthatyoumaintainalogsheettotrackeachsetofofferingdocumentsthatareprovidedtoapotentialinvestor.Eachprivateplacementmemorandum(“PPM”)senttoaninvestorshouldbeconsecutivelynumbered,andarecordshouldbemadeoftheperson’snameandaddress.Ifthepersondecidesnottoinvest,everyeffortshouldbemadetohavethatpersonreturnthePPMandrelateddocumentswithinareasonabletime.

Finally,anoticeofsaleonaSecuritiesActFormDmustbefiledwithin15daysofthefirstsaleunderSecuritiesActRegulationDwiththeSECandvariousstates.FailuretofilewillnotadverselyaffecttheavailabilityoftheexemptionbutmayserveasabasisfortheSECtodenytheissuerfuturerelianceonSecuritiesActRegulationD.Further,itisimperativetoupdatecounselastowhenthefirstinvestmentisreceivedsothatcounselmayfiletheSecuritiesActFormDonbehalfoftheprivateequityandhedgefund.



TheCompanyActandtheFundasaPrivatePoolofCapital

FundsaretypicallyorganizedtoavoidthecompliancerequirementsoftheCompanyActbyrestrictingthefundtolessthan100privateinvestors,ortoonly“qualifiedpurchasers.”

AdomesticfundinvestinginsecuritiesisrequiredtoregisterasaninvestmentcompanyundertheCompanyAct,absentanexemptionfromthedefinitionoftheterm“investmentcompany.”Section3(c)(1)oftheCompanyActprovidestheapplicableexemptionsforaninvestmentvehiclethatmeetstwotests:(1)itmusthavenomorethan100beneficialowners;and(2)itmustnotmakeorproposetomakeanypublicofferingofitssecurities.

TheSEChastakenthepositionthattherequirementsunderCompanyActSection3(c)(1)aremetiftheofferingofsecuritiesmeetsthecriteriaofSection4(2)oftheSecuritiesAct,orofRule506ofRegulationD.

Todeterminethenumberofbeneficialownersofafund,eachindividualinvestoriscountedseparately.However,afundjointlyownedbybothspousesisconsideredownedbyonebeneficialowner.Aninvestingentitythatownslessthan10percentoftheoutstandingvotingsecuritiesofafundwillbeconsideredoneperson.PriortotheenactmentoftheNationalSecuritiesMarketsImprovementActof1996(“NSMIA”),anentitythatowned10percentormoreoftheoutstandingvotingsecuritiesofafundwasconsideredonepersonforpurposesofthe100beneficialownertestonlyifthevalueofallofitsholdingsofCompanyActSection3(c)(1)excludedinvestmentcompaniesdidnotexceed10percentoftheinvestingentity’sassets(“Second10PercentTest”).IftheinvestingentityfailedthisSecond10PercentTest,onewasrequiredto“lookthrough”theentitytoitsbeneficialowners,eachofwhomwouldthenbeconsideredabeneficialownerofthehedgefund.NSMIAeliminatedtheSecond10PercentTestandcountsanownerofanypercentageofthehedgefundasonepersonforpurposesofthe100beneficialownertestexceptwherethe10percentormoreownerisaninvestmentcompany,includingthosecompaniesexemptedunderCompanyActSections3(c)(1)and3(c)(7).

Anentitythatisnotapublicorprivateinvestmentcompanywillbeabletoownmorethan10percentofaCompanyActSection3(c)(1)fundandcountasonebeneficialownerforpurposesofthe100-personbeneficialownerlimit.CompanyActSection3(c)(1)fundswill,however,alwaysberequiredto“lookthrough”withrespecttopublicorprivateinvestmentcompaniesthatownover10percentoftheirvotingsecurities.SincetheamendmentstoCompanyActSection3(c)(1)wereintendedtosimplifyapplicationofthestatuteandnotdisruptexistinginvestmentrelationships,CompanyActRule3c-1wasadoptedandprovidesthattheamendedlook-throughprovisionwillnotapplyinthecaseofaninvestorthatheldmorethan10percentoftheoutstandingvotingsecuritiesofaCompanyActSection3(c)(1)fundonorbeforeApril1,1997,providedthattheinvestorcontinuestosatisfytheSecond10PercentTest.



TheSEChasstatedthat,asageneralmatter,thedeterminationofwhetheraninvestorissubjecttotheamendedlookthroughprovisionmustbemadeeachtimetheinvestoracquiresavotingsecurityofaCompanyActSection3(c)(1)fund.Inotherwords,theinquiryismadeatthetimeofinvestment.Asaresult,thelookthroughprovisionwillnotbeappliediftheinvestor’sproportionateshareofthefund’svotingsecuritiesincreasedasaresultofanotherinvestor’swithdrawal,unlessthewithdrawalwaspartofaseriesoftransactionsdesignedtocircumventthelook-throughprovision.

NSMIAalsoaddedanewexceptionfromthedefinitionofinvestmentcompanyunderCompanyActSection3(c)(7),coveringaninvestmentpoolthatdoesnotmakeorproposetomakeapublicofferingofitssecuritiesandwhosesecuritiesareheldexclusivelyby“QualifiedPurchasers.”Absenttheconsiderationspreviouslydiscussed,aCompanyActSection3(c)(7)fundcouldintheoryhaveanunlimitednumberofQualifiedPurchaserinvestors.QualifiedPurchasersaredefinedinSection2(a)(51)(A)oftheCompanyActas:anynaturalperson(includinganypersonwhoholdsajoint,communitypropertyorothersimilarsharedownershipinterestinanissuerthatisexceptedunderCompanyActSection3(c)(7)withthatperson’squalifiedpurchaserspouse)whoownsnotlessthan$5millionofinvestments,asdefinedbytheSEC;anycompany(“FamilyCompany”)thatownsnotlessthan$5millionininvestmentsandthatisowned,directlyorindirectly,byorfortwoormorenaturalpersonswhoarerelatedorbysuchpersons’estates,foundations,charitableorganizationsortrusts;anytrustthatisnotcoveredbyclause(b)andthatwasnotformedforthespecificpurposeofacquiringthesecuritiesoffered,astowherethetrusteeorotherpersonauthorizedtomakedecisionswithrespecttothetrust,andeachsettlororotherpersonwhohascontributedassetstothetrust,isapersondescribedinclauses(a),(b)or(d);andanyperson(e.g.,aninstitutionalinvestor),actingforitsownaccountortheaccountsofotherQualifiedPurchasers,whointheaggregateownsandinvestsonadiscretionarybasis,notlessthan$25millionininvestments.

Additionally,CompanyActRule2a51-1providesthat,withtwoexceptions,aQualifiedInstitutionalBuyer(“QIB”),asdefinedbyRule144A(a)undertheSecuritiesAct,isdeemedtobeaQualifiedPurchaser.SecuritiesActRule144AgenerallydefinesQIBsas:certaininstitutionsthatownandinvestonadiscretionarybasis$100millionofsecuritiesofissuersthatarenotaffiliatedwiththeinstitution(“QIBSecurities”);banksthatownandinvestonadiscretionarybasis$100millionofQIBSecuritiesandthathaveanauditednetworthofatleast$25millionandcertainregistereddealersthatownandinvestonadiscretionarybasis$10millionofQIBSecurities.ThefirstexceptionpertainstodealersandcoordinatesthedefinitionofQIBwiththatofQualifiedPurchaserbyrequiringthedealertoownandinvestonadiscretionarybasis$25millionofQIBSecurities.AdealermaymeettheQualifiedPurchasertestbyowningandinvestingonadiscretionarybasis$25millionofinvestmentsinaccordancewithCompanyActRule2a51-1.



Thesecondexceptionpertainstoself-directedemployeebenefitplanssuchas401(k)plans.TheseplanswillnotbeconsideredtobeQualifiedPurchasersunlesseachoftheparticipantsintheseplansarethemselvesQualifiedPurchasers.CompanyActRule2a51-1defines“investments”broadlyforpurposesofdeterminingwhetherthe$5millionand$25millionQualifiedPurchaserthresholdshavebeenmet.Investmentsincludethefollowing:securities,exceptforsecuritiesthatconstitutea“controlinterest”inissuersotherthan(i)investmentvehiclesexcludedorexemptedfromthedefinitionofinvestmentcompanybyCompanyActSections3(c)(1)through3(c)(9)orRules3a-6or3a-7undertheCompanyAct,(ii)publiccompaniesor(iii)largeprivatecompanieshavingshareholders’equityof$50millionormore;realestateheldforinvestmentpurposes(thiswillexcludethepersonalresidenceofandpropertyusedasaplaceofbusinessbytheprospectiveQualifiedPurchaser);commodityinterests,physicalcommoditiesandfinancialcontractsthatareheldorenteredintoforinvestmentpurposes;andcashandcashequivalentsheldforinvestmentpurposesincludingbankdeposits,certificatesofdeposit,bankersacceptancesandsimilarbankinstrumentsaswellasthenetcashsurrendervalueofinsurancepolicies.

Investmentsmaybevaluedbasedeitherontheirfairmarketvalueorcostandmusttakeintoaccountindebtednessincurredtoacquireaninvestment.ACompanyActSection3(c)(7)fundneedonlyhaveareasonablebeliefthattheinvestorisaQualifiedPurchaserbasedupontheinvestor’srepresentations,buttheinvestor’sstatusmustbeassessedeachtimetheinvestoracquiressecuritiesofthefundunlesssubsequentacquisitionsarepursuanttoabindingagreementrequiringinstallmentsorperiodiccapitalcalls.CompanyActRule3c-5permits“knowledgeableemployees”ofafundandcertainofitsaffiliatestoacquiresecuritiesissuedbythefundwithoutbeingcountedforpurposesofCompanyActSection3(c)(1)’s100investorlimitandpermitssuchemployeestoinvestinaCompanyActSection3(c)(7)fundwithoutmeetingtheQualifiedPurchasertest.Itdefinesa“knowledgeableemployee”toincludeexecutiveofficers,directors,trustees,generalpartnersandadvisoryboardmembersofthefundoritsmanageraswellasotherexperiencedemployeeswhoparticipateinthefund’sinvestmentactivities.

ToprecludecircumventionoftherequirementsofCompanyActSection3(c)(1),theSEChasrequireddistinctCompanyActSection3(c)(1)fundstobe“integrated”forpurposesofdeterminingwhethertheyhaveexceededthe100investorlimitationifareasonableinvestorwouldviewthetwofundsasbeingessentiallythesamebasedonsuchfactorsasthestrategiesbeingpursued,thecompositionoftheirportfoliosandtheirrisk/returncharacteristics.NSMIAprovides,inCompanyActSection3(c)(7)(E),thataCompanyActSection3(c)(1)fundandaCompanyActSection3(c)(7)fundwillnotbetreatedasasingleissuerbytheSEC.Thus,evenifthetwofundsaremanagedinasimilarfashion,theinvestorsinaCompanyActSection3(c)(7)fundwillnotbeincludedindeterminingtheCompanyActSection3(c)(1)fund’scompliancewiththe100investorlimitation.Conversely,nonqualifiedpurchaserinvestorsintheCompanyActSection3(c)(1)fundwillnotimpairthestatusoftheCompanyActSection3(c)(7)fund.



TheInvestmentManagerandtheAdvisersAct

TheAdvisersActregulatestheactivitiesofinvestmentadvisers.Themanagerofafundgenerallywillfallwithinthedefinitionofan“investmentadviser”underSection202(a)(11)oftheAdvisersAct.PriortotheenactmentoftheDodd-FrankWallStreetReformandConsumerProtectionAct("Dodd-FrankAct"),thefundmanagerwastypicallyexemptfromregisteringasaninvestmentadviserunderthe“privateadviserexemption”oftheAdvisersAct.Further,beforetheDodd-FrankAct,apersonwasexemptfromregistrationpursuanttotheAdvisersActifthepersondidnothavemorethan15clients.TheDodd-FrankActamendedtheAdvisersActtoeliminatetheprivateinvestmentadviserexemption,requiringadviserstoprivatefundstoregisterwiththeSECunlesstheadvisercouldrelyuponanalternativeregistrationexemption.

ThoseDodd-FrankActnewregistrationexemptionsundertheAdvisersActareasfollows:

• AdviserstoVentureCapitalFunds–InvestmentadvisersthatactasadviserssolelytooneormoreventurecapitalfundsareexemptedfromtheregistrationrequirementsundertheAdvisersAct.

• AdviserswithLimitedAssetsUnderManagement–InvestmentadvisersthatactsolelyasadviserstoprivatefundsandhaveassetsundermanagementintheU.S.oflessthan$150millionareexemptedfromtheregistrationrequirementsundertheAdvisersAct.

• AdviserstoFamilyOffices–Investmentadvisersthatactasadvisersto“familyoffices”areexcludedfromthedefinitionofinvestmentadviserundertheAdvisersActandarethereforeexemptfromtheregistrationrequirementsundertheAdvisersAct.

• ForeignPrivateAdvisers–InvestmentadvisersthatareforeignprivateadvisersareexemptedfromtheregistrationrequirementsundertheAdvisersAct.A“foreignprivateadviser”isdefinedundertheDodd-FrankActasaninvestmentadviserthat:

o HasnoplaceofbusinessintheU.S.o Hasfewerthan15U.S.clientsandinvestorsintheprivatefundsitadvises.o Haslessthan$25million(orahigheramountastheSECdeemsappropriate)aggregate

assetsundermanagementattributabletoU.S.clientsandU.S.investorsinprivatefundsitadvises.

o DoesnotholditselfoutasaninvestmentadviserintheU.S.oractasaninvestmentadvisertoanyinvestmentcompanyregisteredundertheAdvisersAct.

• AdviserstoSmallBusinessInvestmentCompanies(“SBIC’s”)–Investmentadvisersthatactasadviserssolelytoa“SmallBusinessInvestmentCompany”undertheSmallBusinessInvestmentActof1958areexemptedfromtheregistrationrequirementsundertheAdvisersAct.

• AdviserstoMid-SizedPrivateFunds–TheDodd-FrankActprovidesthat,inissuingregistrationandotherregulationsrelatingtoTitleIVoftheAct(i.e.,therecordkeepingandreportingrequirementsoftheAct)concerninginvestmentadvisersto“mid-sizedprivatefunds,”theSEC



shouldtakeintoaccountthesize,governanceandinvestmentstrategyofsuchfundstodeterminewhethertheyposesystematicriskandwillsetregulationswhichreflectthelevelofsystematicriskposedbysuchfunds.TheDodd-FrankActdoesnotdefinemid-sizedprivatefunds.However,giventheexemptionfromregistrationforprivatefundswithassetsundermanagementintheU.S.oflessthan$150million,theSECwilllikelydefinemid-sizedprivatefundsasfundshavingassetsundermanagementinexcessofthis$150millionthresholduptoacertainaggregateassetsundermanagement.

PriortotheenactmentofNSMIA,investmentadvisersintheUnitedStatesweresubjecttoregulationatboththefederalandstatelevels.TheInvestmentAdviserSupervisionCoordinationAct(“CoordinationAct”),whichwasadoptedaspartofNSMIA,reallocatesregulatoryresponsibilitybetweentheSECandstateregulatorsbasedprimarilyonthesizeandscopeoftheinvestmentadviser’sbusiness.

UndertheCoordinationAct,aninvestmentadviserthatisregulatedorrequiredtoberegulatedinthestateinwhichitmaintainsitsprincipalofficeandplaceofbusinesscanonlyberegisteredwiththeSECifithas$25millionofassetsundermanagementoradvisesaregisteredinvestmentcompany.Notably,stateregulatorsarepre-emptedfromregulatingadvisersregisteredwiththeSEC.However,stateregulatorsretainauthorityoverSECregisteredadvisersunderstateinvestmentadviserstatutestoinvestigateandbringenforcementactionsrelatedtofraudordeceit.Additionally,stateregulatorshaveauthoritytorequire,fornoticepurposes,filingsofdocumentsfiledwiththeSECandpaymentofstatefiling,registrationandlicensingfees.

UnderthepriorAdvisersActrules,afundmanagerthatqualifiedfortheexemptionfromfederalregistrationandthatwasmanaginglessthan$25million(andnotadvisingaregisteredinvestmentcompany)wouldbesubjecttostateregistrationabsentanexemptionunderstatelaw.TheDodd-FrankActamendstheAdvisersActtoaddanadditionalfederalregistrationexemptionformid-sizedadvisers,whichareinvestmentadviserswithassetsundermanagementbetween$25millionand$100million(orahigheramounttobedeterminedbytheSEC),iftheadviserissubjecttoregistrationandexaminationasaninvestmentadviserinthestateofitsprincipalofficeandplaceofbusiness.However,iftheadviserissubjecttoregistrationwith15ormorestates,thentheadvisermayregisterwiththeSEC.Generally,anadviserthatqualifiesforthe“15ormorestates”benchmarkwouldregisterwiththeSECtoforegothecostsofregisteringwithsomanydifferentstates.

TheDodd-FrankActalsomodifiestheexistingintrastateadviserexemptionundertheAdvisersAct(foradviserswhoseclientsareallresidentsofthestatewheretheadviserisprincipallylocated)byexcludinginvestmentadviserstoprivatefundsfromthisexemption.Thus,hedgefunds,privateequityfundsandventurecapitalfundsthatonlyoperateandadviseinonestatearenowrequiredtoregisterwiththeSECunlesstheadviserscanrelyonanalternativeregistrationexemption.



Section1-102(J)ofthePennsylvaniaSecuritiesActof1972exemptsaninvestmentadviserfromstateregistrationiftheadviserhasaplaceofbusinesswithinthestateand,duringthepreceding12monthperiod,hasnothadmorethanfiveclientsanddoesnotholdhimselfouttothepublicasanadviser.Similarexemptionsexistinotherstates.

Registrationisofparticularsignificancetofundsbecauseitimposescertainlimitationsonwhocanbechargedperformance-basedcompensationaswellasrequirementsonhowsuchcompensationiscalculated.Section205(a)oftheAdvisersActappliesonlytoregisteredadvisers,and,generally,prohibitsperformancebasedcompensation.AdvisersActRule205-3providesanexceptiontothisgeneralprohibitionforperformance-basedfeeschargedto“QualifiedClients.”QualifiedClientsmust:(i)haveanetworthofatleast$2.1million(excludingthevalueoftheperson’sprimaryresidenceandcertainassociateddebt);(ii)haveatleast$1millionundermanagementbytheadviser;(iii)bea“QualifiedPurchaser”underSection2(a)(51)(A)oftheCompanyAct;or(iv)fallwithincertaincategoriesofknowledgeableemployeesoftheinvestmentadviser.NotethattheDodd-FrankActrequirestheSECtoanalyzethesethresholdseveryfiveyearstoaccountforinflation.Themostrecentinflation-relatedadjustmentoccurredonJune14,2016,whentheSECincreasedthe“networth”thresholdfrom$2milliontoitscurrent$2.1million.DuetothefiveyearincrementscontemplatedbytheDodd-FrankAct,thenextinflation-relatedadjustmentwillnotberequireduntil2021.

Generally,theindividualinvestorsinthefund,ratherthanthefunditself,areconsideredforpurposesofthisanalysisandtheconditionsofAdvisersActRule205-3mustbeappliedseparatelytoeachinvestor.ACompanyActSection3(c)(1)fundwillbedeemedaneligibleinvestoronlyifallofitsbeneficialownersareeligibleinvestors.However,aCompanyActSection3(c)(7)fundmayenterintoaperformancefeecontractwithoutrequiringeachinvestortosatisfytheeligibilitycriteriaofAdvisersActRule205-3.



ExchangeActRequirements

TheExchangeActhasseveralapplicationstothefundworld,includingbroker-dealerregistrationtoselltheseinterests,thesizeofthefund,disclosureofallmaterialinformation,softdollararrangementprohibitions,ongoingdisclosureobligations,adherencetostatedinvestmentpoliciesandreportingrequirements.

Generally,theExchangeActrequiresbroker-dealerregistrationtomarketandsellinterestsinprivatefunds.However,brokerregistrationofafundoritsmanagergenerallywillnotberequiredbecausetheyarenot"effectingtransactionsinsecuritiesfortheaccountofothers."SeeExchangeAct§3(a)(4).Similarly,dealerregistrationwillnotberequiredofthefundoritsmanagerbecausethefundanditsmanager“buysorsellssecuritiesforsuchperson'sownaccount,eitherindividuallyorinafiduciarycapacity,butnotasapartofaregularbusiness.”SeeExchangeAct§3(a)(5).

Mostfundsandtheirmanagersarenotrequiredtoregisterbecausetheyareconsidered"traders"asopposedtobrokersordealersinthattheydonotpossessthecharacteristicsofabroker-dealer.Infact,fundsandtheirmanagersareessentiallymanagingtheirownaccountonacontinuousbasis.Further,thefundanditsmanagerdonotpossessothercharacteristicsofabroker-dealersincetheydonotmakeamarketinoneormoresecuritiesorextendorarrangefortheextensionofcreditinconnectionwithsecuritiesactivities.

However,problemscananddoarisewhenthirdpartiessellfundinterests.Sucharrangementsrequirethatthethirdpartiesregisterasabroker-dealerorbeassociatedwitharegisteredbroker-dealer.Fundsandtheirmanagersshouldbecautiouswhenusingtheserviceofso-called“finders.”Findersaretypicallyunregisteredpersonswhoseektofindinvestorsforfundstoearnacommission-typefee.Thepaymentofsuccess-basedcompensationtotheseindividualsisunlawful.Itisnotuncommonforfundstoseekadviceastowhethertheyarepermittedtopay“finder’sfees”topeoplewhointroduceinvestorstothefund.Werecommendthatfundsonlypayfinder’sfeestoentitiesthatareregisteredassecuritiesbroker-dealers.Thepaymentoffinder’sfeestounregisteredindividualsorcompaniesraisessignificantcomplianceconcernsunderfederalandstatesecuritieslaws.Further,certainstatesprohibitsuchpracticesandprovideinvestorswiththeopportunitytorescindtheirfullinvestmentifoffersofsecuritiesaremadeinviolationofthestate’ssecuritieslaws.Interestingly,theneedforfindersmaybeobviatedsincetheenactmentoftheJOBSActpermitsgeneralsolicitationsofthefundsolongastheactualbuyersareaccreditedinvestors.

Section12(g)oftheExchangeActrequiresdomesticissuersofsecuritieswithtotalassetsexceeding$10millionandaclassofequitysecuritiesheldby2,000ormorepersonstoregisterthatclassofsecurities.AsconfirmedbythemostrecentamendmentstotheExchangeActRules,theassetandclasssizethresholdsareevaluatedonthelastdayofthemostrecentfiscalyear.Employeeswhoholdsecuritiespursuanttoanemployeecompensationplandonotcountasrecordholdersforthe2,000personthreshold,andupto500ofthe2,000holdersofrecordmaybenon-accreditedinvestors.UntilthepassageoftheJOBSAct,therecordholderlimitwas500.Theadministrativeburdensof



registrationmayeffectivelysettheouterboundsofthenumberofinvestorsinadomestichedgefundat1,999(excludingemployee-investors).

Additionally,theExchangeActrequiresfulldisclosureofallmaterialriskstopotentialinvestors.Forexample,whenyoudiscussaninvestmentopportunitywithpotentialinvestors,itisimportanttobalancethediscussionanddiscloseallofthematerialrisksaswellasthepotentialrewardsoftheinvestment.Thesecuritieslawsrequireyoutodiscloseallmaterialinformationaboutthefund,themanagementteam,theofferingandanyotheritemstopotentialinvestors.Certainbackgroundinformationrelatedtothefund’smanagerssuchascriminalconvictions,pastSECactions,bankruptciesandotheritemsareconsideredmaterialandneedtobedisclosed.AlloftheinformationyouprovidetoinvestorsshouldbeconsistentwiththeinformationcontainedinthePPMand/orofferingcircular.Iftherehavebeenmaterialdevelopmentswithrespecttothefundoranyofthemanagementteam,thePPMand/orofferingcircularwillneedtobeupdated.Undernocircumstancesshouldyoumakeanyguaranteesthataninvestorwillmakeaprofitbyinvestinginthefund.

TheExchangeActalsoprohibitssoftdollararrangements.Fundmanagerspreviouslyenteredintoarrangementswhereaportionofthecommissionsgeneratedintradingonbehalfofthefundwereusedtopurchasegoodsandservicesforthebenefitofthefundmanager.Sucharrangementsmayraisequestionsofaconflictofinterestwhenthefundmanagereffectivelypayshighercommissionsforreceivedgoodsandservicesthatmaynotbefullybeneficialtothefundonwhosebehalfthecommissionsweregenerated.Theportionofcommissionsthatexceedsthelowestavailableratethatisusedtopayforsuchgoodsandservicesisreferredtoas"softdollars."

TheExchangeActalsohasseveralreportingrequirementsthatmaybeapplicabletoprivatefunds.Theserequirementsaresimilarforotherinvestors.Forexample,ifthefundobtainsasignificantpositioninacompanyortheoverallsizeofthefund’sportfolioissubstantial,reportingmayberequired.

Further,fundaccountstatementsmustaccuratelyrepresentfundperformance.Regulatorswillpursueenforcementactionsagainstmanagerspersonallyformisrepresentingprofitsandlossesanddistributingfalseormisleadingaccountstatements.Similarly,fundsmustadheretostatedinvestmentpolicies.Fundsmustpursueaninvestmentstrategyconsistentwithitsrepresentationstoinvestors.Regulatorswillpursueenforcementactionsagainstmanagerspersonallyforlossesincurredasaresultofanundisclosedchangeininvestmentstrategy.

TheExchangeActalsoimposescertainreportingonregulators.Initially,ExchangeActSections13(d)and13(g)requiredisclosure.Onceapersonorgroupofpersonshaveacquireddirectorindirectbeneficialownershipofmorethan5percentofaclassofvotingequitysecuritiesregisteredundertheExchangeAct,astatementdisclosingsuchownershipmustbefiledwiththeSECwithacopysenttotheissuerand,inthecaseofafilingunderExchangeActSection13(d),everyexchangeonwhichthesecurityistraded.ThestatementmustbefiledonExchangeActSchedule13D–alsoknownasa“beneficialownershipreport”–unlessthefilercanqualifytouseExchangeActSchedule13G.SuchSchedulesarefiledelectronicallyviatheSEC’sEDGARsystem.



A13Dbeneficialownershipreportmustbefiledwithin10daysafterthe5percentthresholdisbreached,withthesalientdaybeingthetradedateasopposedtothesettlementdate.Thereafter,amendmentsmustbefiledifthereisamaterialchangeintheinformationpreviouslydisclosed,includingachangeofownershipof1percentormoreoftheoutstandingclassofsecurities.InformationdisclosedintheExchangeActSchedule13Dincludestheidentityofthepurchaser,thepurposeoftheacquisition,thesourceoffundsusedtopurchasethesecurities,votingpowerwithrespecttothesecuritiesownedandmaterialcontractsandarrangementswithrespecttothesecurities.

ExchangeActSchedule13Gisashortformavailabletothreeclassesofinvestorsprovidedthattheyhaveacquiredthesecuritiesintheordinarycourseoftheirbusinessandnotwiththeobjectiveofchangingorinfluencingcontroloftheissuer.ThethreeinvestorclasseseligibletouseSchedule13Gare:“qualifiedinstitutionalinvestors”(includingregisteredbroker-dealers,mostbanks,insurancecompanies,registeredinvestmentcompaniesandregisteredinvestmentadvisers);“exemptinvestors”(referringtopersonsholdingmorethan5percentofaclassofsubjectsecuritiesattheendofacalendaryear,butwhohavenotmadetheacquisitionsubjecttoExchangeActSection13(d));and“passiveinvestors”(investors(i)notseekingtoacquireorinfluence“control”ofanissuerand(ii)owninglessthan20percentoftheoutstandingsharesofanyclassofsecuritiesofsuchissuer).

QualifiedinstitutionalinvestorsandexemptinvestorsmustfiletheirExchangeActSchedule13Gsandsendcopieswithin45daysoftheendofthecalendaryearinwhichthe5percentthresholdwasbreachedandwithin10daysaftertheendofthefirstmonthinwhichbeneficialownershipexceeds10percentandwithin10daysoftheendofanymonththereafterinwhichsuchbeneficialownershipincreasesordecreasesbymorethan5percentasofthelastdayofsuchmonth.Annualfilingsarealsorequiredwithin45daysofyearend.

PassiveinvestorschoosingtoreportonExchangeActSchedule13GarerequiredtofileanExchangeActSchedule13Gwithin10calendardaysafteracquiringbeneficialownershipofmorethan5percentofaclassofsecurities.Aninvestorisnoteligible,however,tofileonExchangeActSchedule13GandmustfileanExchangeActSchedule13Difithasacquiredbeneficialownershipofmorethan5percentofaclassofvotingsecuritiesandisunableorunwillingtocertifythatitisnotseekingtoacquireorinfluence“control”oftheissuer.PassiveinvestorsusingExchangeActSchedule13Garerequiredtoamendtheirfilingwithin45daysaftertheendofthecalendaryeartoreportanychangesintheinformationpreviouslyfiled.

Additionally,theamendmentsimposeseveralsafeguardsagainstabuseofthelessintensivereportingobligationsofExchangeActSection13(g).PassiveinvestorsmustpromptlyfileanamendmenttotheirExchangeActSchedule13Gduringtheyearafteracquiringbeneficialownershipexceeding10percentoftheclassofsubjectsecuritiesand,thereafter,uponanyincreaseordecreaseinbeneficialownershipbymorethan5percent.Whenaqualifiedinstitutionalinvestororapassiveinvestornolongerholdssecuritiesforpassivepurposesandwhenthepassiveinvestor’sholdingsreach20percentormore,



suchinvestorswillloseExchangeActSchedule13GeligibilityandarerequiredtofileanExchangeActSchedule13Dwithin10calendardaysofthateventandwillbecomesubjecttoa“coolingoff”periodthatbeginswiththedateofthetriggeringeventandcontinuesuntil10calendardaysafterthefilingoftheExchangeActSchedule13D.Duringthiscooling-offperiod,thereportingpersonisprohibitedfromvotingordirectingthevotingofthesubjectsecuritiesoracquiringadditionalequitysecuritiesoftheissueroranypersoncontrollingtheissuer.

ExchangeActSection13(f)alsorequiresinstitutionalinvestmentmanagerswithinvestmentdiscretionoveraccountsholdingExchangeActSection13(f)securities(votingsecuritiestradedonanationalsecuritiesexchangeorquotedonNASDAQ)withafairmarketvalueofatleast$100milliontofileaquarterlyreportonExchangeActForm13FwiththeSEC.Reportsaretobefiledwithin45daysoftheendofthefirstcalendaryearinwhichthe$100millionthresholdisbreachedandwithin45daysaftereachsucceedingquarterofthesubsequentyear.TheForm13FdisclosesallholdingsofExchangeActSection13(f)securitiesinexcessof10,000sharesand$200,000inaggregatefairmarketvalueorprincipalamountinthecaseofconvertibledebt.Institutionalinvestmentmanagerswhoexerciseinvestmentdiscretionover$100millionormoreinSection13(f)securitiesmustreporttheirholdingsonExchangeActForm13FwiththeSEC.Whenafundreaches$100millionundermanagement,theremaybearequirementtofileanExchangeActForm13FwiththeSEC.

Further,ExchangeActSection16requires“insider”filings.An“insider”underthissectionisafundthatacquiresinexcessof10percentofaclassofvotingequitysecuritiesregisteredundertheExchangeAct.Whenafundbecomesaninsider,itmustmakeaninitialfilingwiththeSEConForm3,disclosingthatitsownershippositionexceeds10percent.TheinsidermustalsofileupdatesonExchangeActForm4beforetheendofthesecondbusinessdayfollowingthedayonwhichachangeinbeneficialownershipoccurs.Finally,thefundmayhavetomakeannualfilingsonForm5toreporttransactionsinthesecuritynototherwisereported.Section16(b)alsosubjectsthefundtoanobligationtodisgorgetotheissuerany“short-swing”profitsgeneratedfromthepurchaseandsaleoftheissuer’ssecuritieswithinasix-monthperiod.Duringthetimeafundisaninsider,Section16(c)generallyrestrictsshortsalesbyprohibitingshortsalesunlesstheinsiderownsanamountofsecuritiesatleastequaltotheamountbeingsoldshort[ashortagainstthebox]anddeliversthesecuritieswithin20daysofthesaleorplacestheminthemailwithinfivedaysofthesale.

TheDodd-FrankActalsoamendedtheAdvisersActtorequireadditionalrecordkeepingandreportingrequirementsforregisteredinvestmentadviserstoprivatefundsinadditiontomandatingnewexaminationandauditobligationsfortheSECconcerningtheserecordsandreports.TheDodd-FrankActallowstheSECtorequireregisteredinvestmentadviserstoprivatefundstomaintaintheserecordsforeachprivatefundthattheyadviseandtofilewiththeSECanyreportsastheSECdeems“necessaryandappropriate”inthepublicinterestandfortheprotectionofinvestorsorfortheassessmentofsystematicriskbytheFinancialServicesOversightCouncil(“FSOC”).Additionally,theDodd-FrankActmandatesthattherecordsandreportsincludeadescriptionof:



• Theamountofassetsundermanagementandtheusageofleverage,includingoff-balancesheetleverage.

• Counterpartycreditriskexposure.• Tradingandinvestmentpositions.• Valuationpoliciesandpracticesofthefund.• Typesofassetsheld.• Sidearrangementsorsidelettersthatcertaininvestorsinafundobtainmorefavorable

rightsorentitlementsthanotherinvestors.• Tradingpractices.• AnyotherinformationtheSEC,inconsultationwiththeFSOC,maydetermineisnecessary

dependinguponthetypeorsizeofprivatefundbeingadvised.

TheDodd-FrankActalsorequirestheadvisertomakealloftheserecordsandreportsavailabletotheSEC,andtheSECisallowedtosharewiththeFSOCasnecessaryforittoassesssystematicrisk.TheSECmustalsoscheduleperiodicexaminationsofallrecordsmaintainedbyregisteredinvestmentadvisers,andmayconductspecialexaminationsinitsdiscretionwhendeemednecessary.AllrecordsandreportsprovidedtotheSECmustbekeptconfidentialsubjecttocertaincustomaryexceptions.

OnOctober31,2011,theSECandtheUnitedStatesCommoditiesFuturesTradingCommission(“CFTC”)releasedjointrulestoimplementcertainadditionalreportingrequirementsoftheDodd-FrankAct.Undertheserules,SEC-registeredinvestmentadviserswithatleast$150millioninprivatefundsundermanagementmustfileaFormPFwiththeSEC.TheFormPFwillbeusedbytheFSOCtomonitorrisktotheU.S.financialsystem.



CommodityAct

TheCommodityActalsorequiresafundtoregisterasacommoditypooloperator(“CPO”).Forfundmanagers,theymustregisterasacommoditytradingadviser(“CTA”)ifthefundtradesonanorganizedfuturesexchangesuchastheFutures,ForexandCommodities.TheCommodityActalsorequiresregistrationforafundthattradesfuturescontractsorcommodityoptions,orinvestsinanothercommoditypool.Whiletherearesomeexceptions,fundmanagersshouldbeawarethatdependingonthesize,intermsofinvestorsandnetvalue,andthepercentageofassetsinvestedincommoditiestrading,afundmayhavetoregisterwiththeNationalFuturesAssociation(“NFA”)andCFTCasaCPO.

Recently,theCFTCadoptedafinalrulethateliminatedanexemptiontoregistrationthatwillsignificantlyimpacthedgefundsandotherprivatefunds.Priortotheadoptionoftherule,toqualifyfortheexemption,theinterestsinthepoolmusthavebeenexemptfromregistrationundertheSecuritiesActandeachparticipantmustbeaqualifiedeligiblepersonoranaccreditedinvestor.Nowthattheexemptionhasbeenrescinded,anyprivatefundoperatingunderthatexemptionmustregisterwiththeCFTCpriortoDecember31,2012.However,fundsmaystillqualifyforotherexemptions,suchasthedeminimisexception.

Asaresult,prudentplanningisrequiredbeforeinvestinginanyfuturescontractsorcommodityoptions.



Anti-FraudProvisionsandRestrictionsonInvestmentTypes

Fundsandtheirmanagersaresubjecttotheanti-fraudprovisionsoftheSecurities,Exchange,Advisers,CompanyandCommodityActs.Additionally,fromtimetotime,regulationseffectivelybancertaintradingstrategies.Forexample,in2008,theSECadoptedinterimfinaltemporaryRule204TandRule10B-21,ananti-fraudprovisiondesignedtodeter“naked”shortselling.Oftentimes,thesetemporaryregulationsareincorporatedintofinalrulesiftheireffectsaredeemedsufficientlybeneficial.Forexample,aftertheadoptionoftemporaryRule204Tin2008,theSECadoptedfinalRule204in2009,whichwassimilartoRule204Twithsomemodificationstoaddresscommentators’concerns.



StateLawPreemption

Fundsandtheirmanagersaresubjecttothestatesecuritieslawsinthestateswheretheyobtaininvestors,buttherearealsocertainexemptions.Itiscriticaltodetermineinadvancethestateswherethefundwillsolicitinvestorstopurchaseinterestsinthefund.Eachstatehasitsownsetofstatesecuritieslawsknownasblueskylaws,andcompliancewiththeselawswhenraisingmoneyforthefundisimperative.Unlessanexemptionapplies,thefundmayhavetofileanoticewiththestateswhereinvestorsreside.Somestates,suchasNewYork,requirenoticefilingsandthepaymentofafeebeforesolicitinginvestorsinthestate.

Additionally,priortothepassageoftheNSMIA,privateplacementsoffundswererequiredtoadheretostatestatutesandregulationsgoverningtheofferingofsecuritiestostateresidents.Manyofthesestatesrequiredfilingstoqualifytheofferingforexemptionfromregistration.NSMIAamendedSection18oftheSecuritiesActtopre-emptstateblueskylawsbyprohibitingstategovernmentsfromrequiringregistrationorimposingmeritregulationofofferingsof“CoveredSecurities.”CoveredSecuritiesinclude:salesto“qualifiedpurchasers”(definedasaccreditedinvestors.);andsalesinprivatetransactionsunderrulesorregulationsissuedunderSection4(2)oftheSecuritiesAct.ThiscoversofferingsmadepursuanttoRule506ofRegulationD.ItdoesnotcoverofferingsexemptunderRules504or505ofRegulationDorunderSecuritiesActRule701orRegulationAastheseexemptionswereadoptedpursuanttoSection3(b)oftheSecuritiesAct.

Asdescribedabove,stateswillnotbeprohibitedfromimposingnoticefilingrequirementsthataresubstantiallysimilartothoserequiredbyruleorregulationunderSection4(2)oftheSecuritiesActineffectasofSeptember1,1996.SinceRule503(a)ofRegulationDrequiresthefilingofaSecuritiesActFormDwiththeSECnotlaterthan15daysafterthefirstsaleofsecurities,thefilingrequirementsofthestatesshouldnowfollowSecuritiesActRule503intermsofthetimingofthefiling.EvenifastatehasnotamendeditssecuritieslawtorequireanoticefilingpursuanttoNSMIA,NSMIA,nonetheless,requiresthatissuerspayafilingfeetothestatedeterminedpursuanttostatelawasineffectonOctober10,1996.

Statesalsoregulateperformancefeesforfundmanagers.ThefactthatanadvisermeetsthesafeharborofAdvisersActRule205-3doesnotpreventastatefromfurtherrestrictingperformancefeearrangementsiftheadviserissubjecttostateregulation.Moststatesgenerallyprohibitaninvestmentadviserfromchargingperformancefees,althoughanumberofstates,butnotallstates,provideanexceptionfromsuchprohibitionwithrespecttoaninvestmentadviserthatfollowsRule205-3undertheAdvisersActortheversionofthatRulethatexistedpriortoitsamendmentonAugust20,1998.

Additionally,moststates’definitionofbroker-dealerareacombinationofthedefinitionsofbrokeranddealerundertheExchangeAct.Moreover,manystates’securitieslawscontainprovisionsmandatingsuchsecuritieslawsbeinterpretedtopromoteuniformitywithotherrelatedandsimilarstatestatutesandfederalregulation.Regardingtheinterpretationofstatesecuritieslawdefinitions,state



securitiescommissionsandstatecourts,generally,followwithgreatdeference,theSEC’sinterpretationsofsimilaroridenticaltermsunderthefederalsecuritieslaws.Accordingly,fundsthatarenotdeemedtobebrokersand/ordealersundertheExchangeActwouldusuallynotbedeemedtobebroker-dealersunderstatesecuritieslaws.However,afundshouldcarefullyreviewthesecuritieslawofthestatewhereitplanstoconductitsbusiness.

Finally,statesalsoretainedjurisdictiontoinvestigateorbringenforcementactionswithrespecttofraudordeceitorunlawfulconductbyabrokerordealerinconnectionwithsecuritiesorsecuritiestransactions.



TaxandERISAConsiderations

Althoughmutualfundsaresubjecttodiversificationrequirementsiftheyreceivetaxbenefits(i.e.,acertainpercentageofthefund’sassetsarelimitedsuchthatthefundmayownnomorethan10percentoftheoutstandingsecuritiesofaportfoliocompany,andthattheportfoliocompanystockmaynotconstitutemorethan5percentofthevalueoftheassetsofthefund),fundsarenotsubjecttosuchdiversificationrestrictions.

Section7704oftheInternalRevenueCodeof1986,asamended(“IRC”)andrelatedregulationsprovidethatapartnershipwithmorethan100investorswillbetreatedasa“publiclytradedpartnership”andtaxedasacorporationifinterestsinthepartnershiparetradedonanestablishedsecuritiesmarketorasecondarymarketorthesubstantialequivalentofsuchamarket.Apartnershipmaybeexemptfromcorporatetaxstatusifit:(1)limitsitsincometo“qualifyingincome;”(2)limitsinvestorredemptionssoasnottoprovideliquidityequivalenttoasecondarymarket;or(3)limitsthenumberofinvestorsto100.

MostfundsalsoseektoavoidfallingunderthePlanAssetRegulationsoftheEmployeeRetirementIncomeSecurityActof1974(“ERISA”)byensuringthat“benefitplaninvestors”hold,intheaggregate,lessthan25percentofthevalueofanyclassofequityinterestinthefund.Ifthislimitisexceeded,thefundwillbeconsideredtohold“planassets”andcouldbesubjecttoahostofERISA-relatedregulations.Congresshasconsideredlegislationthatwouldmakefundsmoreaccessibletobenefitplaninvestors,suchaslimitingthedefinitionof“benefitplaninvestors”orraisingtheminimum“participation”threshold.However,thosemeasureshaverepeatedlyfailedtopassintolaw.



ForeignRegulation

Foreignregulators–mostnotably,theUnitedKingdom’sFinancialServicesAuthority–areembarkingonareviewoftheirregulationsregardingthemarketingandsaleoffunds,aswellasinvestigatingfundactivity.However,in2010,theBritishgovernmentannouncedplanstoabolishthisagency,andonDecember19,2012,FinancialServicesActof2012waspassed.ThisActabolishedtheFinancialServicesAuthorityeffectiveApril1,2013.Initsplacerosetwonewagencies:theFinancialConductAuthorityandthePrudentialRegulationAuthorityoftheBankofEngland.TheHedgeFundWorkingGrouphaspublished“bestpracticestandards”focusedondisclosurethatsomefundshavevoluntarilyadopted.



FINRAConsiderations

Sellingfundintereststoinvestorsbythirdpartiesrequiresbroker-dealerregistration.TheFinancialIndustryRegulatoryAuthority(“FINRA,”previously,“NASD”)isaself-regulatoryorganizationofwhichallSEC-registeredbroker-dealerswhoconductsecuritiesactivitiesintheover-the-countermarketplacemustbeamember.AlthoughFINRAdoesnotregulatefunds,itdoesoverseebroker-dealersthatmarkethedgefundinvestmentproducts.Inresponse,FINRAissuedNoticetoMembers03-07,inwhichFINRAmemberswereremindedthat,whensellingfundsandfundsoffunds,certaindisclosuresandundertakingsmustbemade.Theserequirementsinclude(1)providingbalanceddisclosureinpromotionalmaterial;(2)performingareasonablebasis(duediligence)andcustomer-specificsuitabilitydeterminations;(3)supervisingthoseassociatedpersonssellingthesefunds;and(4)trainingpersonnelconcerningafund’sfeatures,risksandsuitability.SeeNASDNoticetoMembers03-07.



Self-Regulation

TheManagedFundsAssociationandtheAlternativeInvestmentManagementAssociationarealsocurrentlydraftingaframeworkforaprinciples-basedregulatorysystem.WhilethePresident’sWorkingGrouponFinancialMarketshassofarendorsedavoluntaryself-regulatoryregime,therehasbeennoactiononthisproposaltodate.Historically,theSEChaslookedtothehelpofself-regulatoryinstitutionstoassistitinwhatisanever-increasingenforcementburden.AslongastheSECcontinuestofacecapacityissues,expectconversationsaboutself-regulationinthefundindustrytocontinue.



Conclusion

Insum,wecautionallthosewhoengageinsecuritiestransactionswithoronbehalfofprivateequityorhedgefundstobepreparedfortheensuingscrutinythatwillundoubtedlyleadtotheirdoorsteps.FoxRothschildLLPattorneysremainreadytoresolveanyinquiriesanddeveloppoliciesandprocedurestoensurethatyouareprotected.



Section2:StructuralOverviewSummaryofTerms

ThefollowingisasummaryofthemoredetailedinformationtypicallycontainedinaConfidentialPrivateOfferingMemorandum(a“Memorandum”).

ThePartnership: [ALPHA]FundI,LP(the“Partnership”)isaDelawarelimitedpartnership.TheprincipalplaceofbusinessofthePartnershipislocatedat[ ].

InvestmentObjectivesandTradingStrategies:

ThePartnership’sobjectiveistomanageasmallandmidcapitalizationlong/shortequityportfoliofocusedongenerating[aboveaverage/superior]marketreturnsoveramid-to-long-termbasis.Currentincomeisnotaprimaryinvestmentobjective.ThePartnershipwilltargetcompaniesfrom[$35]millionto[$2.5]billioninmarketcapitalizationastheInvestmentAdviserbelievesthesecompaniestypicallyreceivelittleornoresearchcoverage,yetofferanattractiverelationshipbetweenenterprisevalue,growthopportunitiesandmarketvaluation.TheInvestmentAdviserintendstoselectsecuritiesbasedprimarilyonfundamentalanalysisusingitsinformationnetworkandaffiliatedresearchpersonneltoidentifyandevaluatepotentialinvestmentopportunities.Whenfeasible,theanalysisprocessmayincludeadetailedreviewofacompany’sfinancialstatements,interviewswithmanagement,discussionswithsuppliers,customersandcompetitors,anddiscussionswithindustryexperts.TheInvestmentAdviserbelievesitcangeneratesuperiormidtolong-termreturns,inpart,byrelyingon ,aproprietarylogarithmicexecutionandtradingstrategyownedandlicensedfromanaffiliate.ItistheGeneralPartner’sstatedintenttocaptheoverallassetsundermanagementofthisproductto$______million.

INSERTCLAUSEREDIVERSIFICATION:[TheInvestmentManagerintendstolimitthePartnership’sexposuretoilliquidorrestrictedsecuritiestonomorethan___percentofthePartnership’sassets(asofthetimeofpurchase).However,theInvestmentManagerdoesnototherwiseintendtolimitthetypesofsecuritiesorotherinstrumentsinwhichthePartnershipmayinvest,theconcentrationofinvestments(whetherbysector,industry,country,assetclassorotherwise)ortheamountofleverageemployed.]



ThePartnershipintendstoinvestin,hold,sell,tradeandotherwisedealinSecurities,consistingprincipally,butnotsolely,ofequityandequity-relatedSecuritiesthataretradedpubliclyindomesticmarkets.WhendeemedappropriatebytheInvestmentAdviser,thePartnershipmayalsoinvestinpreferredstocks,privatecompanies,equitypartnershipinterests,convertibleSecurities,warrants,options,bondsandotherfixed-incomeSecurities,foreignSecurities,derivativesandmoneymarketinstruments.ThePartnershipmayalsoengageinshortselling,hedgingandotherinvestmentstrategies.Thesestrategiesmayinvolvetheuseofleveragethroughmargintradingorothermechanisms.

TheGeneralPartner: ThegeneralpartnerofthePartnershipis[]CapitalManagement,LLC(the“GeneralPartner”),aDelawarelimitedliabilitycompany.TheGeneralPartner’sprincipalofficeislocatedat[].ThemanagingmemberoftheGeneralPartneris[ ](the“ManagingMember”).TheManagingMemberintendstomakeaninitialinvestmentonbehalfoftheGeneralPartnerinthePartnershipof$ .

TheInvestmentManager: [ ]CapitalManagement,LLC,aDelawarelimitedliabilitycompany(the“InvestmentManager”)isresponsibleformanagingtheportfolioofthePartnership,andisalsoresponsibleforcertainadministrativematters.TheInvestmentManagerisnotregisteredwiththeSECorwiththe[state]asitspresentlyonlymanagesthepooledfundsofthePartnership;thus,fitswithinanexemptionfromregistrationrequirementsduetoitslimitednumberofclients.

OtherActivitiesoftheGeneralPartnerandtheInvestmentManager:

Althoughitdoesnotpresently,theInvestmentManagermayinthefutureserveasaninvestmentmanagertootherprivateinvestmentfunds.TheGeneralPartnermayalsoserveasageneralpartner,managingmemberorinvestmentadvisertootherprivateinvestmentfunds.SomeoralloftheseotherprivateinvestmentfundsmayhaveinvestmentobjectivesthataresimilarordifferentthanthoseofthePartnership,andmayalsoco-investwiththePartnershiponthebasisofavailablecapital.



Expenses: ThePartnershipwillreimbursetheGeneralPartnerforthecostsoforganizingthePartnershipandtheinitialofferingofPartnershipInterests(whicharenotexpectedtoexceed$_________).ThePartnershipwillberesponsibleforallofitsoperatingexpenses,including,butnotlimitedto,third-partyadministratorfees,brokeragecommissions,allinvestment-relatedexpenses(e.g.,researchexpensesandtravelexpensesrelatedtoresearch),legalandaccountingexpenses,investmentexpensessuchascommissions,custodialfees,bankservicefeesandotherexpensesrelatedtothepurchase,saleortransmittalofPartnershipassets,andoverheadexpensesofanordinaryandrecurringnature.TheorganizationalexpensespaidbythePartnershiparebeingamortizedoveraperiodof60monthsfromthedatethePartnershipcommencedoperations.

EachoftheGeneralPartnerandInvestmentAdviserisresponsibleforitsownadministrativeexpensesincluding,butnotlimitedto,officespaceandsalariesofpersonnel(althoughthePartnershipdoesintendtosub-leasecertainofficefacilitiesfromanaffiliateoftheGeneralPartner).

ManagementFee: ThePartnershipwillpaytheInvestmentManageraquarterlymanagementfee(the“ManagementFee”)inadvancecalculatedatarateof0.50percent(i.e.,2.0percentperannum)ofthevalueofeachlimitedpartner’scapitalaccount.TheManagementFeewillnotbereturnedifaLimitedPartnerwithdrawshis,heroritsinvestmentbeforetheendofacalendarquarter.

CapitalAccounts: AcapitalaccountshallbeestablishedfortheGeneralPartnerandforeachLimitedPartner.CapitalAccountswillbeadjustedtoreflectallocationsofthePartnership’snetcapitalappreciationordepreciation,theManagementFee,theProfitAllocation(asdefinedbelow),otherPartnershipexpenses,capitalcontributions,withdrawalsandothersimilarcreditsanddebitsduringthetermofthePartnership(the“CapitalAccount”).

AllocationofNetProfitsandLosses;IncentiveAllocationtoGeneralPartner:

If,withrespecttoanyfiscalyearandsubjecttothelosscarryforwardprovisionsbelow,aLimitedPartnerhasanetprofitwithrespecttohis,heroritsCapitalAccount(includingrealizedandunrealizedgainsandlosses),anamountequalto20percentofsuchnetprofitwillbe



deductedfromsuchLimitedPartner’sCapitalAccountasoftheendofsuchfiscalyear(the“ProfitAllocation”)andreallocatedtotheCapitalAccountoftheGeneralPartner.

NodeductionfromaLimitedPartner’sCapitalAccountwithrespecttotheapplicableProfitAllocationwillbemadeinrespectofafiscalyearuntilanynetlosspreviouslyallocatedtotheCapitalAccountofsuchLimitedPartnerhasbeenoffsetbysubsequentnetprofitsallocatedtotheCapitalAccountofsuchLimitedPartner.Anysuchlosscarryforward,however,willbesubjecttoreductionforwithdrawalsbysuchLimitedPartner.

Distributions: ThePartnershipintendstoaccumulateprofitsforreinvestmentanddoesnotintendtomakeperiodicdistributions.

TheOffering: ThePartnershipintendstoconductaprivateofferingofaminimumof$ ofPartnershipInterests(the“MinimumOffering”)andamaximumof$ ofPartnershipInterests(the“MaximumOffering”).TheMinimumOfferingwillbecompletedonorbefore[Insertadatecertain]andpriortothattime,allproceedswillbemaintainedinanescrowaccountadministeredby[insertnameofindependentescrowagent].

Theminimuminitialinvestmentis$ ,[generally,notlessthan$500,000to$1million]subjecttowaiverinthesolediscretionoftheGeneralPartner.InterestsinthePartnershipgenerallywillbesoldonlytopersonswhoare“accreditedinvestors”asdefinedinRegulationDoftheSecuritiesActof1933,asamended.TheGeneralPartnermayadmitlimitedpartners,oracceptadditionalcapitalcontributionsfromexistingpartners,onthefirstdayofeachmonthandatsuchothertimesastheGeneralPartnerwill,initssolediscretion,permit.

Withdrawals: Uponatleast[60]days’priorwrittennoticetotheGeneralPartner,alimitedpartnermaywithdrawalloranypartofitscapitalaccountasofthelastdayofthemonththatoccurs[generallythereisaninitialholdingperiodofatleastoneyear]onoraftertheone-yearanniversaryofthedateofitsinitialinvestmentinthePartnershipandasofthelastdayofeachsix-monthperiodthereafter(eacha“WithdrawalDate”).



Ingeneral,uponalimitedpartner’sfullwithdrawalfromthePartnership,atleast90percentoftheamountoftheestimatedvalueofthelimitedpartner’scapitalaccountasofthewithdrawaldatewillbepaidwithin30daysafterthewithdrawaldate.Thebalance,ifany,willbepaidpromptlyafterthecompletionoftheauditofthePartnershipforsuchyear.

Notwithstandingtheforegoing,ifwithdrawalrequestsarereceivedasofanyWithdrawalDateformorethan20percentofthenetassetvalueofthePartnershipasofsuchWithdrawalDate(the“WithdrawalLimit”),theGeneralPartnermay,initssolediscretion(i)satisfyallofsuchwithdrawalrequests;or(ii)reduceallwithdrawalrequestsproratasothataggregatewithdrawalsasofsuchWithdrawalDateequaltheWithdrawalLimit.Totheextentalimitedpartner’swithdrawalrequestisreduced,anyexcesswillbepaidasoftheendofthenextWithdrawalDateandeachWithdrawalDatethereaftersubjecttotheWithdrawalLimit,untilthetotalamountrequestedtobewithdrawnhasbeenpaidinfull;provided,however,thatsuchwithdrawalrequestwillbegivenpriorityoveranynewwithdrawalsrequestedforsuchsubsequentWithdrawalDate.

Reports: EachlimitedpartnerwillreceiveunauditedreportsoftheperformanceofthePartnershipmonthlyandauditedyearendfinancialstatementsannually.

RiskFactors: AninvestmentinthePartnershipinvolvessignificantrisksandissuitableonlyforpersonswhocanbeartheeconomicriskofthelossoftheirentireinvestment,whohavealimitedneedforliquidityintheirinvestmentandwhomeettheconditionssetforthintheMemorandum.TherecanbenoassurancesthatthePartnershipwillachieveitsinvestmentobjective.InvestmentinthePartnershipcarrieswithittheinherentrisksassociatedwithinvestmentsinsecurities.EachprospectivelimitedpartnershouldcarefullyreviewtheMemorandumandtheagreementsreferredtohereinbeforedecidingtoinvestinthePartnership.

TaxConsiderations: ThePartnershipwillnotbesubjecttoU.S.federalincometaxandeachLimitedPartnerwillberequiredtotakeintoaccountitsdistributiveshareofitemsofPartnershipincome,gain,lossand



deductionsubstantiallyasthoughsuchitemshadbeenrealizeddirectlybysuchLimitedPartner,whetherornotactualcashdistributionsaremadetosuchLimitedPartner.

SuitabilityStandards: ThePartnershipmayacceptsubscriptionsfrompensionandprofit-sharingplansmaintainedbyU.S.corporationsand/orunions,individualretirementaccountsandKeoghplans,entitiesthatinvesttheassetsofsuchaccountsorplansandotherentitiesinvestingplanassets(allsuchentitiesarehereinreferredtoas“BenefitPlanInvestors”).TheGeneralPartnerdoesnotanticipatethatthePartnership’sassetswillbesubjecttotheEmployeeRetirementIncomeSecurityActof1974,asamended(“ERISA”),ortheprohibitedtransactionprovisionsofSection4975oftheInternalRevenueCodeof1986,asamended(the“Code”),becausetheGeneralPartnerintendstolimittheinvestmentsinthePartnershipbyBenefitPlanInvestors.UnderERISAandtheregulationsthereunder,thePartnership’sassetswillnotbedeemedtobeplanassetssubjecttoTitleIofERISAorSection4975oftheCodeiflessthan25percentofthevalueofeachclassofequityinterestofthePartnershipisheldbyBenefitPlanInvestors,excludingfromthiscalculationanynon-BenefitPlanInvestorinterestsheldbytheGeneralPartnerandcertainaffiliatedpersonsorentities.ThePartnershipwillnotknowinglyacceptsubscriptionsforlimitedpartnershipinterestsorpermittransfersoflimitedpartnershipintereststotheextentthatsuchinvestmentortransferwouldsubjectthePartnership’sassetstoTitleIofERISAorSection4975oftheCode.Inaddition,becausethe25percentlimitisdeterminedaftereverysubscriptiontoorwithdrawalfromthePartnership,theGeneralPartnerhastheauthoritytorequirethewithdrawalofallorsomeofthelimitedpartnershipinterestsheldbyanyBenefitPlanInvestorifthecontinuedholdingofsuchinterests,intheopinionoftheGeneralPartner,couldresultinthePartnershipbeingsubjecttoTitleIofERISAorSection4975oftheCode.



ABOUTTHEAUTHORS ErnestE.Badway|Partner|212.878.7986|973.994.7530|[email protected]

Ernestisco-chairofthefirm’sSecuritiesIndustryPracticeandadvisesclientsonabroadrangeofbusinessmatters,includingsecurities,intellectualproperty,employment,corporategovernance,partnershipdisputes,contractsandlitigation.Healsocounselsclientsonthecreationofbroker-dealers,hedgefundsandinvestmentadvisersaswellascomplianceandregulatorymattersrelatingtotheiroperations.

Ernestisalsotheformerco-chairofthefirm’sWhiteCollarCompliance&DefensePracticeandhasextensiveexperienceinrepresentingindividualandcorporateclientsininternalinvestigations.

JoshuaHorn|Partner|215.299.2184|[email protected]

Joshuaisco-chairoftheSecuritiesIndustryPractice.Herepresentsmajorfinancialservicescompaniesinmattersthroughoutthecountry.Healsorepresentsfinancialadvisorycompanies,individualadvisors,andcounselorsinFINRAexaminations,enforcementandarbitrations.JoshuahasalsorepresentedindividualbrokersondisciplinarymattersbeforeFINRAandstatesecuritiescommissions,andhasrepresentedcompaniesandindividualsinSECinvestigations.

Joshua’spracticealsoincludestherepresentationofthepremiermerchantcardprocessingcompanyinvariousmatters,includingclassactions,throughoutthecountry.

BenjaminH.McCoy|Associate|610.397.7972|[email protected]

Benisanexperiencedtrialandappellatelitigator.Hehasabroadcommercialpracticewithanemphasisoninternational,employment,entertainmentandintellectualpropertylitigation.

AsubstantialpartofBen’spracticeinvolvestherepresentationofclientsininternationalbusinesslitigation.Manyofthesecross-borderdisputesinvolvecomplexissuesandoftenturnontheapplicationofforeignlaw.BenhasparticularexperiencelitigatingcivilRICOclaims,shareholderderivativesuits,andbreachofcontractactions.Inaddition,Benfrequentlyworkswithforeigncounselinordertocoordinatetheprosecutionofactionsabroad.

©2019FoxRothschildLLP.Allrightsreserved.Thispublicationisintendedforgeneralinformationpurposesonly.Itdoesnotconstitutelegaladvice.Thereadershouldconsultwithknowledgeablelegalcounseltodeterminehowapplicablelawsapplytospecificfactsandsituations.Thispublicationisbasedonthemostcurrentinformationatthetimeitwaswritten.Sinceitispossiblethatthelawsorothercircumstancesmayhavechangedsincepublication,pleasecallustodiscussanyactionyoumaybeconsideringasaresultofreadingthispublication.

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