Kareim Oliphant

Every fund starts with a clear & focused investment thesis, which answers:

✔️ What are you investing in? (Asset class, geography, industry)
✔️ Why now? (Market trends, opportunities/risks, timing)
✔️ Why you? (Your expertise, competitive edge, acumen)

Remember, "vibes" and "luck" aren't strategies. 🙏🏾

Common fund structure in real estate:

⚖️ GP: Legal control; earns carried interest; usually formed for each fund.

🏢 ManCo: Operating business w/ employees & offices. It manages the fund for a fee & lasts across multiple funds.

🏠 HoldCo: Owns assets directly (e.g., real estate).

These companies got slapped with civil penalties ranging from $60k - $175k.

That's a high toll for failing to make a free filing.

It's just not worth the risk.😬

At our firm, we take Reg D compliance so seriously that we pre-file Form D for every fund we form—submitting it even before the initial closing. ✅

Many don’t realize that pre-fling Form D is an option, but it ensures there’s never a risk of missing the 15-day deadline.

The offerings here involved ~$300 million worth of securities.

While Form D filing is generally mandatory regardless of the transaction size, it's definitely hard to fly under the SEC's radar with deals involving hundreds of millions. 😅

As quick background, if you're issuing a security in reliance on Regulation D exemptions/safe harbors, you must file Form D within 15 calendar days after the first sale of securities. 🗓️

In case you’re wondering, yes, the SEC does crack down on those who don’t timely file Form D when selling unregistered securities under Regulation D. ⚖️

Let’s say it together:

"For securities under Reg D, file Form D!"

Link to the suit/petition here: t.co/gbAcLZmtXA

Is the accredited investor definition valid as-is or outdated? The truth is probably somewhere in the middle.

The debate rages on!

The counterargument is that financial metrics are a protection mechanism to ensure that only investors who can absorb the potential losses in private markets participate in these investments.

Replacing these with non-financial metrics will result in a lot of ordinary people losing their shirt.

The rationale for the petition?

Democratize the private financial markets.

ICAN argues that the SEC’s recent attempts to broaden the definition by including holders of certain securities licenses doesn’t go far enough to ensure broad access to private markets.

Currently, to be deemed an accredited investor, the main financial metrics to meet are having a $1 million net worth (excluding primary home 🏠), or $200k annual income ($300k with a spouse).

In 2022, Investor Choice Advocates Network (ICAN) petitioned the SEC to change the “accredited investor” definition by replacing the wealth and income requirements with non-financial criteria based on knowledge and experience.

ICAN is now suing the SEC to consider the petition.

Fortunately, many AML/CFT compliance tasks can be outsourced to third-party providers. However, this demands proactive coordination—please don’t wait until December 31, 2025, to begin. 😅

5⃣ Ongoing Customer Due Diligence

4⃣ AML/CFT Employee Training

3⃣ Designate an AML/CFT Compliance Officer

2⃣ Independent Testing of the AML/CFT Program

Critically, there are five "pillars" to an effective AML/CFT program.

I've set them out below with clippings of the actual text from the final rule:

1⃣ Internal Policies, Procedures, and Controls

The final rule will require certain fund managers to:

▶️establish a reasonable, risk-based AML/CFT program,
▶️ file Suspicious Activity Reports w/ FinCEN, maintain certain records, and
▶️ follow other BSA-related obligations, including special information sharing procedures.

"Financial Institutions" traditionally included:
🏦 Banks
💼 Broker-dealers in securities
🎰 Casinos
💵 Money services businesses

and so on.

Per the recent FinCEN final rule, the definition of "financial institutions" will now include investment advisers (certain RIAs + ERAs).

As background, the Bank Secrecy Act (BSA) requires certain "financial institutions" to adopt certain minimum standards for implementing AML/countering the financing of terrorism (AML/CFT) programs.

Heads up, fund managers:

On January 1, 2026, certain Registered Investment Advisers (RIAs) + Exempt Reporting Advisers (ERAs) will be required, among other things, to implement a robust anti-money laundering (AML) compliance program, per recent FinCEN final rule. 🧵

Say it with me now: "Away with the CTA!"

If your entities or portfolio companies were preparing for CTA compliance, this ruling could be huge (pending any further appeals). Stay tuned.

Will the DOJ appeal this Texas ruling? Probably. After the Alabama ruling, the DOJ appealed to the 11th Circuit. We could see similar action here.

But here, the Texas court stated its order applies nationwide, impacting all entities subject to the CTA, not just the parties involved.

This ruling follows an Alabama case earlier this year that also found the CTA unconstitutional.

In the Alabama case, FinCEN clarified that the court's ruling applied only to the plaintiffs in that litigation.

The court also stayed the upcoming compliance deadline, offering temporary relief to entities impacted by the reporting requirements.

A federal district court in Texas issued a preliminary injunction preventing the Department of Treasury from enforcing CTA’s reporting requirements nationwide.