Tokens of Wisdom

Episode 62: Sharing the Wisdom (Salman Ali) When I set out to do this show, my goal was to arm aspiring fund managers with the information they need to launch and operate a fund. In the legal realm, I happen to possess a lot of that information from my day job, but there's so much more that goes into launching and operating a fund. And wise though I may be, my area of expertise doesn't cover it all. So I'm going to bring in some friends to share their wisdom in various other aspects of fund management.  I am honored to have Salman Ali from CBIZ on the show today to tell us all about fund audits!  Key Points From This Episode: What does the fund audit process entail?What are level 1, 2, and 3 assets? Why does it matter for an audit?How do auditors charge for their services?What does auditor independence mean?What kind of info does the auditor need to complete its work?How do auditors charge for their services?How to choose the right auditor for your fund?What's the smartest thing a new fund manager can do? Disclaimer: This show is for informational purposes only. Nothing presented here constitutes legal, investment or tax advice. The guests that join us are sharing their considerable fund-related wisdom, but everything they share here is their personal opinion and for educational purposes only. On this show, they are speaking for themselves, and not for their employer or any affiliated entity. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/ Links Mentioned in Today's Episode: Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Salman Ali - https://www.linkedin.com/in/salmanali310/Cole-Frieman & Mallon LLP - https://colefrieman.com/CBIZ - https://www.cbiz.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Episode 61: Hedge Fund Offering Terms, Part 1: Compensation Today is the first in a series of Tokens of Wisdom episodes walking through the main offering terms for an open-ended fund, aka a hedge fund.  One of the first things I do with new fund clients is take them through a fund questionnaire to determine the offering terms for their new fund. This is usually a one hour conversation, at the end of which I have most of what I need to draft the fund's offering documents. Since I know ToW listeners like it short and sweet, I'm going to break this up into a handful of different episodes. Today's episode discusses compensation terms. Key Points From This Episode: How are fund managers typically compensated?What's a management fee? What's a performance allocation?What variables are relevant for each? Disclaimer: This show is for informational purposes only. Nothing presented here constitutes legal, investment or tax advice. The guests that join us are sharing their considerable fund-related wisdom, but everything they share here is their personal opinion and for educational purposes only. On this show, they are speaking for themselves, and not for their employer or any affiliated entity. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/ Links Mentioned in Today's Episode: Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com 

Episode 60: Sharing the Wisdom (Bert McCooey)This is an exciting day in Tokens of Wisdom history! Not only do you get to see my real-life face, but you also get the unparalleled wisdom of Bert McCooey from Ascent Fund Services.When I set out to do this show, my goal was to arm aspiring fund managers with the information they need to launch and operate a fund.In the legal realm, I happen to possess a lot of that information from my day job, but there's so much more that goes into launching and operating a fund. And wise though I may be, my area of expertise doesn't cover it all. So I'm going to bring in some friends to share their wisdom in various other aspects of fund management. I am honored to have Herbert “Bert” McCooey from Ascent as my inaugural guest to tell us all about fund administration! Key Points From This Episode:What does a fund admin do? Let's get granular!Why do I need one?How do fund admins charge for their services?What is reputational risk for an LP in a fund?Was Bert's best friend as a child named Ernie?What's the best thing a new fund manager can do? Disclaimer: This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/ Links Mentioned in Today's Episode: Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Bert McCooey - https://www.linkedin.com/in/bert-mccooey-a6b24414/Cole-Frieman & Mallon LLP - https://colefrieman.com/Ascent - https://www.theascent-group.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Episode 59: Peeling LayersAt the federal level, the tables are turning faster than at a vintage Tiesto performance: it's honestly hard to keep up with how quickly the federal government has done a total 180 on crypto.Key Points From This Episode:What was the now-disbanded National Cryptocurrency Enforcement Team?How is the United States similar to an onion?What's happening beneath the federal layer, at various state regulators?NY, CA and OR flexing their enforcement muscle to the collective groan of the crypto industry.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Episode 58: Yet Another CTA Update (Yawn) Last time I spoke to you about the CTA, I said I wanted to discuss it about as much as I wanted a hole in the head. A little over a month later, nothing has changed. In my mood that is.But alas, much has changed in the world of required BO reporting, so here I am standing in front my mic and talking about it again. Key Points From This Episode: FinCEN's New Interim Final Rule.Who's in scope?Who's out of scope?What are the new deadlines? Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Episode 57: Fixing the Hole in Your Net (And More!)If you thought the kinder, gentler SEC was only going to be kinder and gentler to the crypto community, you thought wrong. Today I'm going to briefly summarize two recent SEC actions that relaxed marketing-related rules: clarifying requirements for marketing materials and elements of 506(c). Key Points From This Episode:What is the SEC's marketing rule?What are case studies?SEC FAQ from early 2023 muddies the waters.The trouble in calculating case studies net of fees and expenses.SEC FAQ from March 2025 clarifies things.What's all this about 506(c)?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:New FAQ: https://www.sec.gov/rules-regulations/staff-guidance/division-investment-management-frequently-asked-questions/marketing-compliance-frequently-asked-questions506(c) No Action Letter: https://www.sec.gov/rules-regulations/no-action-interpretive-exemptive-letters/division-corporation-finance-no-action/latham-watkins-503c-031225Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com 

Episode 56: Interpretive Clarity.By now, you've probably heard the latest news from the sunshine and rainbows SEC: Meme coins are not securities!  This is great news for the crypto community, which has a little more clarity today on how the SEC will interpret securities laws as they apply to digital assets. But is this the regulatory clarity we've long clamored for? Not quite… Key Points From This Episode: What does the SEC's Meme Coin Statement say?Reasons to be excited.Reasons to temper excitement.The difference between regulatory clarity and interpretive clarity.Comparing and contrasting SEC reasoning today, vs SEC reasoning way back when (18 months ago). Disclaimer: This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/ Links Mentioned in Today's Episode: SEC Meme Coin Statement: https://www.sec.gov/newsroom/speeches-statements/staff-statement-meme-coins Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com 

Episode 55: Sunshine and Rainbows…from the SEC. Just a couple short weeks ago I told you all about President Trump's executive order on crypto, which was heavy on happy speak and light on substance.   Of course, literally as I was recording that episode, the SEC started putting its money where its mouth is. Indeed, since I started speaking into that mic a couple weeks ago the SEC has: Repealed SAB 121, restarted its crypto task force, paused the suit against Binance, and straight-up dropped lawsuits or investigations into Coinbase, RobinHood, OpenSea and Uniswap (among other things). Don't be alarmed, this lightning pace won't scare away the sunshine and rainbows. It's a new day in the SEC's approach to crypto, so break out the popcorn and get comfortable. It's shaping up to be a fun few years.  Key Points From This Episode: Quick rundown of recent SEC actions.Deep dive into the SEC's crypto task force and what it plans to do.Description of why these developments promote the SEC's mission.Soapbox moment.Reminiscing about Whac a Mole. Disclaimer: This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/ Links Mentioned in Today's Episode: Commissioner Peirce's letter: https://www.sec.gov/newsroom/speeches-statements/peirce-journey-begins-020425SEC Mission: https://www.sec.gov/aboutDave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Guess Who's Back Episode 54: Show Notes. It's true that I wanted to release this episode about as much as I want a hole in the head. But, I did promise you multiple times that I would keep you updated on the dumpster fire of the Corporate Transparency Act and…a liar I am not. Here's the TL;DL(“listen”): The CTA is back on, and initial BO reports are due on March 21, 2025 for most entities.  Key Points From This Episode: CTA is back!History of the CTA Ping Pong Match.Current status and deadlines.All hope is not lost.Embrace the BO. Disclaimer: This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/ Links Mentioned in Today's Episode: Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

A New Sheriff Episode 53: Show Notes. We went three whole days into Trump Administration 2.0 without the creation of a strategic bitcoin reserve, an announcement ending all federal lawsuits against crypto industry participants, and without any major crypto news. In fact, well into day 4 of the administration, the scoreboard looked like this: Trump Meme coins: 2; Executive action supporting crypto: 0. Then on January 23, 2025, Trump issued an Executive Order titled, “STRENGTHENING AMERICAN LEADERSHIP IN DIGITAL FINANCIAL TECHNOLOGY”.  Key Points From This Episode: What's in the executive order?What is model food?SAB 122 Disclaimer: This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/ Links Mentioned in Today's Episode: Executive Order: https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Everyone wants in on the AI craze – in addition to being the latest buzzy trend, AI is a technology that can actually think for you (or at least, trick people into thinking it's thinking). Given the potential time and money savings AI can generate, a business owner like you might be negligent for not exploring how it could help their business. But before you go too hog wild, listen to today's episode for a boring dose of caution. How's that for a tag line?!  Key Points From This Episode:Quick Corporate Transparency Act update.How investment advisers that want to dive head-first into AI are like my children.Important considerations for investment advisers using AI:Acceptable Use Policy Accurate disclosures Mind the fiduciary duty!Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

As you all prepare to hunker down by the fire, sip your egg nog and enjoy the company of your dearest friends and family members, throw in your earbuds, turn up the volume and unwrap this auditory gift recapping the year that was in fund and cryptoland 2024!  Key Points From This Episode:Recapping the rosiest crypto developments from 2024. Bitcoin's meteoric rise.Clearer regulatory skies. Judiciary ascendant. Guessing at what the future holds in 2025. Strategic Bitcoin reserve?Future of the Safeguarding Rule proposal?Legislation?? My annual discussion of pecan pies.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:CFM's EOY update - https://hedgefundlawblog.com/ Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Good news just keeps on flowing out of the federal judiciary, as a District Court in Texas issued a nationwide preliminary injunction on Dec 3 enjoining the enforcement of the Corporate Transparency Act and the FINCEN beneficial ownership reporting requirement.This means that means that FOR NOW, companies do not have to file beneficial ownership reports with FINCEN under the corporate transparency act.  Key Points From This Episode:What's a “preliminary injunction”?What must a plaintiff prove to obtain one?How did the district court analyze these elements here?What happens next for the CTA?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Whatever your views on the election outcome, we can all enjoy the high – literally and figuratively – that's captured the crypto world since early November.Today's episode quickly recaps three recent developments that we can all celebrate.  Key Points From This Episode:Bitcoin's meteoric rise.Gary Gensler is resigning!A district court in Texas struck down an SEC rule that drastically expanded who had to register as a broker-dealer.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

There is a presidential election happening right now, and regardless of your political views, if you're listening to this, you probably like crypto. In fact, the election-related question I get most frequently goes something like this:  If Trump wins, will he really replace Gary Gensler on day one as promised? Or If Harris wins, will she replace Gensler as quickly as Trump would? This of course begs the question: Can the president fire the SEC chair? Turns out, there is significant legal uncertainty around how an SEC chairperson can be removed. Key Points From This Episode:History of the SEC and how it is managed.What does the law say about SEC commissioner removal?What does the constitution say about SEC commissioner removal?What is common historical practice when there's a new president?Baseless speculation/prediction time!Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.comSupreme Court Cases discussed today:Myers v United States: https://supreme.justia.com/cases/federal/us/272/52/Humphrey's Executor v. United States: https://supreme.justia.com/cases/federal/us/295/602/Free Enterprise Fund v. Public Company Accounting Oversight Board: https://supreme.justia.com/cases/federal/us/561/477/

On my last episode, I went through a few common ill-conceived soundbites people wield against crypto generally and calmly explained why they're a bunch of crap.But there was one I didn't touch last time because I thought it was deserving of a little more spotlight. Haters sometimes claim that the crypto industry doesn't want any regulation, and is spending oodles of cash buying off politicians to prevent the government from regulating crypto. Not true.The crypto industry certainly spends big money on lobbying, but it's using those dollars to beg the government to adopt sensible regulations that treat digital assets like the 21st-century creation that they are, rather than trying to shove the square peg of a digital asset into the round hole of 1930s legislationKey Points From This Episode:High-level differences between traditional securities and digital assets.What information is relevant to a traditional securities investor?What information is relevant to a digital asset investor?What information do U.S. federal securities laws mandate be disclosed in connection with securities registrations?What information do U.S. federal securities laws NOT mandate be disclosed in connection with securities registrations?Why requiring digital asset issuances to register under existing regulatory and disclosure frameworks doesn't work.Airplane analogies!Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

I keep hearing noise from talking heads denigrating and dismissing crypto with pithy ill-conceived soundbites. It's the kind of thing you expect to hear from the Gary Genslers and Elizabeth Warrens of the world, but I also hear it from people whose opinions I usually respect.Inspiration for today's episode came from the 9/20/24 episode of Real Time with Bill Maher, where Bill and his panel fall all over each other to out-hate on crypto, using (to borrow Kamala Harris's favorite phrase): the same old tired playbook written by the likes of Gensler and Warren.Key Points From This Episode:Rebutting crypto-haters' pithy ill-conceived soundbites, such as:Aghhh crypto! It's all just a ponzi scheme.It's all made up! There's No inherent value.It's just a playground for criminals and terrorists.But it's terrible for the environment.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

The digital asset fund manager community is up in arms about the SEC's latest shenanigans against Galois Capital, and I'm here to tell you; so am I!The SEC alleged three separate violations, and gave us zero helpful detail/analysis/guidance that might let other asset managers avoid similar acitons.Key Points From This Episode:What violations did the SEC allege Galois Capital committed?What does a settlement mean?Why so much secrecy?Shout out to Laura Shin.A few rays of sunshine.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Galois Settlement - https://www.sec.gov/files/litigation/admin/2024/ia-6670.pdfUnchained podcast - https://open.spotify.com/episode/0WLRqpxdDNHcZgygf3MwJvDave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

An episode all about the glorious topic of marketing decks for private funds. Almost every fund has one. Almost every lawyer's brain explodes when reviewing them. Tune in today to learn all about why. Key Points From This Episode:What rules govern investment adviser/fund marketing?The Seven Deadly Sins.What's an Endfoot?Common mistakes in marketing decks.Shout out to the new puppy that has set up residence in my home, Ringo.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Quick hit today to remind investment advisers about the SEC's pay-to-play rule; formally known as Advisers Act Rule 206(4)-5. You may have heard that there's a little election coming up here in November, and you may be emptying the piggy bank in support of your candidates of choice. Before going too hog wild though, make sure you brush up on your pay-to-play rule! Key Points From This Episode:Why should I care about this, especially now?What is the pay-to-play rule?Who are government clients?Any exceptions?One oopsie at the end.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Exciting times this month, as certain institutional investment managers are gifted a new regulatory filing requirement! Key Points From This Episode:What is Form N-PX?Who has to file it?What needs to be reported?What is the deadline?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

On back-to-back days in late June, the US Supreme Court issued two decisions that reasserted judicial primacy in statutory interpretation and dealt a blow to executive authority. The cases were SEC vs Jarkesy and Loper Bright Enterprises v. Raimondo, and together they demonstrate a Supreme Court deeply skeptical of the administrative state and of an executive branch usurping powers that belong to the judiciary. Key Points From This Episode:Summary of the Jarkesy and Loper Bright holdings.A brief history of the U.S. Constitution and Administrative Procedures Act.What do these cases mean for fund managers and the crypto industry?What do they mean for the SEC?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Last summer, the Sunshine State passed into law a new private fund exemption for investment advisers operating in Florida. It went into effect on Oct 1 last year, and thus FL has belatedly joined the community of states taking a lighter regulatory stance toward private fund managers. Key Points From This Episode:Why this is great news for fund managers.How Florida investment adviser rules worked previously.Parameters of Florida's private fund exemption.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

It's not everyday that I do a podcast episode about super technical banking rules. It's also not every day that the president vetoes bipartisan legislation in an election year. But here we are…. Key Points From This Episode:What is SAB 121?Why do crypto degens hate it?Why do ordinary Americans hate it?Why does Tony the Mechanic love it?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Tony the Mechanic Clip - https://www.youtube.com/watch?v=cEsERIcTeB4&t=54sDave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Big news today (June 5) as the 5th circuit court of appeals VACATED the SEC's private fund adviser rule!! Go back and listen to Episode 21 if you want to waste your time hearing all the details of this now-defunct rule. Special Note: you may notice while listening to today's episode that I mistakenly refer listeners to Episode 29 for my full PFAR breakdown (I refer to “Episode 29” several times). Turns out, I'm even worse at math than I thought, because my PFAR episode is # 21; not 29…Rather than delay the episode and re-record, I'm alerting you here. Cuz everyone reads the show notes, obviously.Key Points From This Episode:What is Section 206(4) of the Advisers Act, and why does it NOT give the SEC authority to issue PFAR?What is Section 211(h) of the Advisers Act, and why does it NOT give the SEC authority to issue PFAR?What provisions of the Advisers Act DO give the SEC authority to issue PFAR? Hint: None.A little bragging about how prescient I was in Episode 21 (not episode 29). Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:5th Circuit Ruling - https://storage.courtlistener.com/recap/gov.uscourts.ca5.215539/gov.uscourts.ca5.215539.123.1.pdfDave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Today's episode is all about the government's attempts to jam the square peg of crypto mixers Tornado Cash and Samourai Wallet into the round hole of unlicensed “money transmitters”.But to grasp the full story, we need to understand some basic terms. Like “money transmitter”.Key Points From This Episode:What are (were?) Tornado Cash and Samourai Wallet?What is a “money transmitter”?The regulatory area where crypto guidance from the federal government has been relatively clear and proactive.Why these actions undercut that seeming clarity.A soapbox moment about “due process” and fairness. Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Last episode we dissected the SEC's “venture capital fund” definition and discussed how, if an adviser manages only VC funds, there is no AUM ceiling on its ability to remain exempt from registration. If that same adviser manages money for any non-Venture capital fund, it has to register as an investment adviser once AUM hits $150mm. This can lead some less scrupulous investment advisers to try to “game” the system by forming new adviser entities, thinking they can skirt regulation by forming new legal entities.Well, not so fast. The wool can't be pulled over Uncle Sam's eyes that easily (unfortunately?) – the SEC has a doctrine of “adviser integration” where under certain circumstances, two ostensibly separate investment adviser entities are treated as one business for purposes of advisers act compliance.Key Points From This Episode:Under what circumstances are two ostensibly separate investment adviser entities treated as one business?What is operational independence?The four areas the SEC focuses its analysis:Capital structureControlPersonnelInvestment decision-makingWhy, if this analysis is relevant to you, you really need a good lawyer.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Like I mentioned back in Episode 2, there are some down sides to relying on the private fund exemption – at the SEC level, the only “down” side is an AUM ceiling after which you have register (150mm…see ep 32). But many states require extra stuff if you're managing any 3c1 funds: this varies by state, but many impose annual audit requirements and either increased investor accreditation thresholds, restrictions on who can pay performance-based comp, or both. EXCEPT those restrictions don't apply to managers whose only clients are “venture capital funds”.So what is a “venture capital fund”? Tune it to today's episode to find out!Key Points From This Episode:The “venture capital fund” definition. Quick summary: It's a “private fund”;it represents to investors that it's is pursuing a venture capital strategy;it severely limits any borrowing;it provides no redemption rights to investors except in extraordinary circumstances;it's not registered under the Investment Company Act; andImmediately after acquiring any asset, it must hold no more than 20% of its aggregate capital contributions and uncalled commitments in assets that are not “qualifying investments”.What is a “qualifying investment”?Why do people hate Congress?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

One of the underappreciated tasks a new fund manager needs to complete is its management company operating agreement. This is the agreement among the principals of the management company that controls how the entity is governed, how economics are split among the principals, etc.Key Points From This Episode:Why is it important to paper these agreements?Why they sometimes get put on the back burner.Brief discussion of the four primary areas to consider:Economics;Corporate governance;Exit provisions; andRestrictive covenants. Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Recently, it seems like tokenizing things is all the rage. Everybody wants to talk about tokenizing real estate or art or securities or any other “real world asset”. Heck, even “RWA” has become a commonly understood acronym to describe things that exist in tangible form, as opposed to just digitally. Well, private investment funds are no different, and I've noticed an uptick recently in managers inquiring about tokenizing their fund offerings. Today's episode is all about tokenized funds.Key Points From This Episode:What are RWAs?What is a tokenized fund?Similarities and differences in the launch process for a tokenized fund vs a traditional fund.Considerations unique to tokenized funds.Theoretical and practical reasons to tokenize a fund offering.Benefits and drawbacks to tokenized fund products.Is it worth it? Preview – it depends. Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Tokenized Fund Blog Post - https://hedgefundlawblog.com/tokenized-private-funds-hedge-funds-vc-funds.html Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

March Madness means something different for compliance professionals and investment management lawyers: it means a crush of ADV Amendments! Tune in to today's episode for some nice bedtime listening about the ins and outs of one of the world's least interesting regulatory filings. Key Points From This Episode:Who files a Form ADV?When are regular amendments due?What kinds of information typically change?How this amendment relates to a investment adviser registration obligations.Why is this similar to your annual gutter cleaning? Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

What does My Cousin Vinny have to do with third party marketers? Tune in to today's episode to find out! Hint: nothing. Key Points From This Episode:What makes My Cousin Vinny such a great movie?How can I pay my cousin commissions for selling interests in my fund?Why your cousin is unlikely to be moonlighting as a broker-dealer. Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

A couple months ago, I did an episode discussing the Corporate Transparency and concluded that, while it's annoying and kinda stinks, it's not that big of a deal. Well, we're now a couple weeks into the reign of the CTA and I'm back to tell you….I was wrong (kinda).Key Points From This Episode:Why CTA compliance might be annoying for your typical fund manager.Examples of the kinds of CTA amendments that might be necessary on an ongoing basis.Multiple analogies of questionable effectiveness. Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Christmas is right around the corner, and that can only mean one thing: Dave's year-end podcast episode!! As we say goodbye to 2023 and its rock-bottom crypto prices, let's raise a glass to the future, and open an ear to a quick rundown of the year's most significant crypto and fund storylines. Key Points From This Episode:Turning 2022's frown upside down.BTC price action.A walk down memory lane, from bank runs to bull runs. Happy New Year!!Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

I talk to a lot of 1st time fund managers and one common mistake I hear is that they think the fund entity is their business. But it's not. The fund is a passive investment vehicle. It might be the focus of your business; it might be your business's only revenue source; it might take up almost all of your time; but your management company – not your fund – is your business. In today's episode we're talking all about management company structuring considerations. Scintillating stuff!Key Points From This Episode:Common management company structuring considerations.Quick rundown of the most common management company structures, from simplest to most complex:Single entity;Bifurcated;Bentley.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Soroban Capital Opinion - https://www.jdsupra.com/legalnews/tax-court-hampers-funds-ability-to-1321278/#_ftn1Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Exciting (?) new law hits the books that will affect almost every business entity formed or operating in the United States! It's the Corporate Transparency Act!Key Points From This Episode:What business entities are captured by the new law?What does the new law require?What is FinCEN?What kinds of entities are exempt from the CTA (hint, registered CTAs are among them)?What are the deadlines?What if I don't do it?Why should I care?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Today we're keeping the performance-based comp discussion going and looking at “Carried Interest” or “Carry” for short: performance-based compensation for closed-end funds – VC, PE, etc. One big structural difference from open-ended funds is that the GP typically doesn't get performance-based comp on paper (i.e., unrealized) gains. For a refresher on closed-end vs open-end funds, listen to Episode 9.Instead, proceeds from monetization events get distributed among the partners in proportions dictated by a complicated cascading mechanism in the fund's offering documents. That cascading mechanism is called: The Waterfall!Key Points From This Episode:Background on the Waterfall concept and an elegant analogy to help you visualize it.Examples of the waterfall in action – from simple to more complex.Descriptions of “preferred return” and “GP catchup” provisions.Ways to make the Waterfall even more complex.American vs European waterfalls.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Building off our last episode's discussion of performance allocations and high water marks, today we're tackling hurdle rates. If you need more background on today's topic, listen to Episode 24 first.Key Points From This Episode:What is a Hurdle Rate and how does it work?(Not so) surprising fact about Olympic gold medals.Hard hurdle rate vs Soft hurdle rate.Illustrative examples.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Today we're talking all about High Water Marks in a hedge fund-style vehicle. Of course, to understand HWMs, first you need a basic understanding of how performance allocations work, so we start there.Key Points From This Episode:Basic performance allocation mechanics.What is a High Water Mark and how does it work?A few ways to make it more complicated.Illustrative examples with math simple enough even I can do it.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

What's a fund expense vs a manager expense? Fund managers are often curious about what expenses they will be responsible for, and what expenses the fund will cover itself. This is especially important for first-time managers forecasting cash needs for their new management company business.For the most part, if you accurately and fully disclose to fund investors what expenses the fund will bear, the fund is able to bear those expenses. But what's typical? What will investors expect, and what might cause them to run for the hills? Listen up to find out! Hint: they don't want to pay for your super yacht. Key Points From This Episode:Expenses typically borne by fund vehicles.Expenses typically borne by the management company.What expense provisions are often negotiated?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Feels like a lot has been happening in the crypto world lately, and while none of these stories/events is individually worthy of its own episode, everyone loves the occasional news roundup. So in this episode we take a quick ride through some recent newsworthy events affecting The Space. Key Points From This Episode:Grayscale's court win.Financial Accounting Standards Board's new fair value accounting rules for digital assets.New proposed Treasury Department rules.SEC's enforcement action against NFT issuer Impact Theory.Terraform Labs Order.Industry groups sue the SEC to block implementation of the private fund adviser rule.Celebrating circles.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Grayscale win: https://www.reuters.com/legal/us-court-says-sec-wrong-deny-grayscales-spot-bitcoin-etf-proposal-2023-08-29/FASB Fair Value Accounting: https://www.coindesk.com/policy/2023/09/06/fasb-says-crypto-assets-should-be-marked-at-current-values/#:~:text=The%20first%20U.S.%20accounting%20rule,Accounting%20Standards%20Board%20(FASB).Treasury Department Proposal: https://dailyhodl.com/2023/09/08/u-s-treasury-and-irs-propose-new-rules-that-broaden-client-information-crypto-businesses-are-required-to-file/Impact Theory Settlement: https://www.sec.gov/files/litigation/admin/2023/33-11226.pdfTerraform Labs Order: https://storage.courtlistener.com/recap/gov.uscourts.nysd.594150/gov.uscourts.nysd.594150.51.0.pdfLawsuit vs Private Fund Adviser Rule: https://nvca.org/press_releases/nvca-asset-management-associations-file-lawsuit-to-set-aside-secs-new-private-fund-adviser-rule/Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Big news in Private Fund Land, as the SEC Commissioners on voted August 23rd to adopt one of the more significant new private fund-specific rules in recent memory. This one was about 18 months in the making (the rule was first proposed in early 2022), and while the final rule pared back the most overreaching aspects of the proposal, it still has far-reaching impacts that will alter how pretty much all private fund advisers do business. This episode is a high-level summary of the more significant aspects of the 660-page rule.Key Points From This Episode:Summary of key provisions in the new rule – some of which only apply to registered investment advisers, and others of which apply regardless of registration status.When does the new rule become effective and when do managers have to comply with its various provisions?Dave's quick take on the new rule.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:SEC Release adopting the rule: https://www.sec.gov/files/rules/final/2023/ia-6383.pdfDave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

If you're a fund manager based outside the United States with no operations in the U.S., you may think American securities laws don't extend to you. But if you're seeking to raise capital from U.S. investors, you are wrong. As soon as you sell fund interests to even a single U.S. investor, you are selling securities in the United States (and you need to comply with the Securities Act), your fund is an investment company (and you need to comply with the Investment Company Act), and you – the manager – are acting as an investment adviser (and you need to comply with the Investment Advisers Act). If that sounds familiar, you've been listening to your Tokens of Wisdom! Back in episodes 1 and 2 we laid out the regulatory regime that applies to these businesses in the United States, and that same regime applies to non-U.S. based managers selling interests to U.S. investors. There are some key distinctions though, primarily in the Investment Advisers Act analysis, which we dig into today.Key Points From This Episode:Refresher on the “legislative triangle” from episode 1.The three levels of investment adviser regulation that might apply to your business: foreign private adviser exemption; private fund exemption; and investment adviser registration.How to determine which level applies to you.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

By now you've all heard the great news coming out of the Southern District of New York: Ripple defeated the SEC!! This is, no doubt, an enormous win for Ripple and the crypto community writ large, but it's not the end of the fight. And and some of the hot takes you read on Twitter (or Threads?) are…less than accurate. Shocking, I know. On today's episode, I share my brief summary of the order, what's celebration-worthy, and what isn't.Key Points From This Episode:Summary of the Ripple order: Is XRP a security? No. Did Ripple sell a security when it sold XRP? Sometimes.Difference between an asset, and an investment contract in respect of that asset.Why comparing this analysis to shares of Apple stock misses a key distinction.More of your favorite Supreme Court case from 1946 (Howey!).Why this order makes the SEC's case against Coinbase (and others) harder.What's head-scratchy in the order?Could this make actual crypto legislation more likely?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Link to final order - https://www.nysd.uscourts.gov/sites/default/files/2023-07/SEC%20vs%20Ripple%207-13-23.pdf  Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

If you want early fireworks before the 4th tomorrow, listen to last week's Unchained Podcast where Laura Shin “interviewed” Aaron Kaplan, co-CEO of Prometheum, and Paradigm Special Counsel Rodrigo Seira. I put “interview” in quotes because it's more like she refereed a prize fight. Listen to that before you listen to this, then come back here and hear why Aaron's arguments don't hold much water.Key Points From This Episode:Reg D is an issuer exemption.What's Rule 144 and why is it hard to apply in the context of digital assets?Why Prometheum can't fulfill its mission to protect investors (hint: because it has none…because it has no tokens to list).Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Unchained from June 27 - https://unchainedcrypto.com/prometheum-and-paradigm-in-debate-can-the-status-quo-work-for-crypto/. Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Armageddon or Salvation? Who knows! But everybody's using AI all of a sudden, including fund managers in a variety of novel and interesting ways. Listen up for a handful of questions/observations from my recent experience. Mostly, make sure you're thinking through the implications of any new technology you're using. Key Points From This Episode:Best and worst use cases for various AI technologies.Robots hallucinating.Trust, but verify.Understand confidentiality and security issues, and be wary about sharing sensitive information with robots.Should you replace me with a robot?Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

SEC vs Binance on Monday. SEC vs Coinbase on Tuesday. What a week! The gloves are officially off, and the SEC is coming hard after the crypto titans. What does it all mean? You've come to the right place.Key Points From This Episode:Similarities (unregistered offerings galore!) and differences (fraud!) between the Binance and Coinbase allegations.Why the allegations against Coinbase seem particularly disingenuous.Why if you try hard enough, everything fails the Howey Test.A glass-half-full conclusion (I am an eternal optimist after all).Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/SEC vs Binance Complaint - https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-101.pdfSEC vs Coinbase Complaint - https://www.sec.gov/litigation/complaints/2023/comp-pr2023-102.pdfParadigm Articles - https://policy.paradigm.xyz/writing/secs-path-to-registration-part-iMusic by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

Today's show is all about decentralized autonomous organizations…DAOs! What are they? How do they work? Why you should probably learn the answers to the two prior questions before listening to this.Key Points From This Episode:High-level overview of the concept of a DAO.Dave's Top 5 issues for fund managers to consider before touching DAO tokens with fund assets:Liability;Regulatory;Governance;Security; andDisclosure.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Ooki DAO - https://www.cftc.gov/PressRoom/PressReleases/8590-22The DAO - https://www.coindesk.com/learn/understanding-the-dao-attack/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

We have a super-sized episode for you today, and it's different from our usual fare in more than just length. Last week, I invited Fizza Khan - CEO of Silver Regulatory Associates; Mike Fitzgerald – Managing Director and Global Head of Cap Intro at TD Cowen; and Malhar Oza – Senior Associate at CFM to join me for an in-person event discussing the SEC's marketing rule. This episode is a lightly edited recording of that conversation.Key Points From This Episode:The new marketing rule consolidates two prior SEC rules and myriad SEC guidance from multiple decades.The new rule has been in full force and effect for six months, and managers have many questions about how to comply.The final rule release is 430 pages long, and if it could be distilled down into two words, they would be: “don't mislead”.Why exempt advisers should comply with it too, even though it only technically applies to registered investment advisers.Social media considerations for fund managers.Why you need to net fees and expenses out of performance results in marketing materials.Issues around substantiation.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Fizza Khan - https://www.linkedin.com/in/fizzakhan1/Mike Fitzgerald - https://www.linkedin.com/in/michael-fitzgerald-bb2b4572/Malhar Oza - https://www.linkedin.com/in/malharoza/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

In a less-than-stellar fundraising environment, some aspiring fund managers want to dip their toe into the fund waters by forming an SPV to invest in one high-conviction idea. An SPV in this context is just a “mini fund” - it's an investment vehicle formed by a manager to pool capital from outside investors to make (usually) a single investment. Key Points From This Episode:Different ways in which people use the term “SPV”.Flashback to the Legislative Triangle from Episode 1 and why the kinds of SPVs we're discussing today need to comply with all three sides.Why an SPV like this can often be launched faster and cheaper than a more complex fund vehicle.High-level legal cost breakdown on fund formation vs SPV formation, and the different buckets of cost you're likely to incur.Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com

In a less-than-stellar fundraising environment, many aspiring fund managers want to dip their toe into the fund waters, without incurring the expense of a full fund offering. This is where an incubator fund might make sense, and that's the topic of today's episode. An incubator fund allows an aspiring manager to test an investment strategy and develop a track record that can eventually be marketed to outside investors.Key Points From This Episode:My definition of an incubator fund, and how it differs from another common definition.Flashback to the Legislative Triangle from Episode 1 and the four prongs of the Howey Test from Episode 2.Why a true incubator fund cuts corners off the Legislative Triangle.Limitations of an incubator fund (no outside investors, no compensation).Disclaimer:This show is for informational purposes only. Nothing presented here constitutes legal advice. Tokens of Wisdom is produced by Dave Rothschild, partner at Cole-Frieman & Mallon LLP headquartered in San Francisco, California. For more information, visit https://colefrieman.com/Links Mentioned in Today's Episode:Dave Rothschild - https://www.linkedin.com/in/davidcrothschild/Cole-Frieman & Mallon LLP - https://colefrieman.com/Music by Joe Ginsberg - https://www.instagram.com/thejoeginsbergFor any questions or comments, email: tow@colefrieman.com