Legacy Management Consulting Group LLC Bulletin: SEC Custody Rule Deadlines for Fund Advisors

Aug. 3, 2010 - PRLog -- "Advisers whose clients include private investment funds must ensure that audited financial statements are delivered timely to all investors within 120 days of the fund's fiscal year end" stated Dominick Sartorio, Director of New Business at Legacy Management Consulting Group LLC. However, an adviser to a "fund of funds" may distribute their audited financials to investors within 180 days from the "fund of funds" fiscal year end.   The SEC defines "fund of funds" as a pooled investment vehicle that invests 10 percent or more of its total fund assets in other pooled investment vehicles that are not, and are not advised by, any related person(s) of the pool, its general partner(s), or its adviser(s). However,  to avoid becoming subject to the additional requirements under SEC Rule 206(4)-2 of the Investment Advisers Act of 1940 (the "Custody Rule"), most advisers to hedge funds must deliver timely audited financial statements by April 30.
"In general, these audited financial statements under any fund structure must be prepared in accordance with Generally Accepted Accounting Principles ("GAAP")" stated Anthony Urbano, Principal at Legacy.
Any advisers that do not distribute timely audited financial statements by their required deadline will be deemed to have custody of investor assets under the Custody Rule and be subject to other additional requirements, including, but not limited to, engaging an independent public accountant to perform a surprise audit before December 31.

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U.S. Treasury Circular 230 Notice:  Any U.S. federal tax advice included in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal tax penalties.

The information contained herein was prepared by Legacy Management Consulting Group, LLC from public documents for general informational purposes.  Its contents should not be construed as professional advice, and readers should not act upon the information contained herein without consulting a professional.  This information is presented without any representation or warranty as to its accuracy, completeness or timeliness.  Transmission or receipt of this information does not create any relationship with Legacy Management Consulting Group, LLC.  Electronic mail or other communications with Legacy Management Consulting Group, LLC cannot be guaranteed to be confidential and will not imply nor create any relationship with Legacy Management Consulting Group, LLC.

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