Requirement to File Beneficial Owner Information Report with FINCEN

September 15, 2024 Comments Off on Requirement to File Beneficial Owner Information Report with FINCEN

As part of ongoing efforts to enhance transparency and combat financial crimes, the Financial Crimes Enforcement Network (FINCEN) of the U.S. Department of the Treasury has implemented new regulations regarding beneficial ownership information. These regulations aim to increase accountability and prevent the misuse of corporate entities for illicit purposes.

Under these regulations, certain entities, including corporations, limited liability companies (LLCs), limited partnerships (LPs), limited liability partnerships (LLPs) and other similar legal structures, are required to file a Beneficial Owner Information Report (BOI Report) with FINCEN. This report collects information about the individuals who ultimately own or control the legal entity, commonly referred to as beneficial owners.

Most companies will be required to submit a BOI Report although there are 23 categories of legal entities that are not required to report, including SEC-registered (but not state-registered) investment advisers and broker-dealers. In short, each reporting business will need to provide information regarding any beneficial owner holding 25% or more of the equity in the business. However, in most instances, legal entities are required to additionally report information on persons with “substantial control” over the legal entity regardless of whether they have an equity interest in the company; these can include President, CEO, CFO, COO, GC, Manager(s) of LLCs, General Partners of LPs, etc. To determine who must be included in the BOI Report, click below for a copy of the BOI Small Entity Compliance Guide.

It is imperative that your business complies with these regulations to avoid potential penalties and legal consequences. Failure to file the required report with FINCEN by the specified deadline could result in fines and other enforcement actions. For a legal entity formed prior January 1, 2024, you must submit your BOI Report on or prior to January 1, 2025. For any legal entity formed on or after January 1, 2024, the deadline for your BOI Report is within 90-days from the date of formation.

To determine whether your legal entity is subject to this reporting requirement and to understand the necessary steps for compliance, we recommend you click the link below and review the BOI Small Entity Compliance Guide and/or immediately contact our office or your CPA. 

You may file your BOI Report on your own, but the process is not entirely intuitive. The online portal to file a BOI Report can be found at: https://boiefiling.fincen.gov/fileboir.

If, however, you need assistance with filing your BOI Report, please contact me. 

Click Here for the BOI Small Entity Compliance Guide

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Jack G. Martel is the author of Investment Adviser Law Blog which is devoted to providing information and discussion of interest to investment advisers, private fund managers and others in the financial management industry. Jack is a partner in Ragghianti | Freitas LLP. He has over twenty years’ experience in general business and securities transactions with a focus on assisting investment advisers, fund sponsors and managers in all manner of legal, regulatory and compliance issues. Jack can be reached at 415.453.9433.

SEC Proposes Increase to Form 13F Reporting Threshold

July 10, 2020 Comments Off on SEC Proposes Increase to Form 13F Reporting Threshold

The SEC today proposed the first update to the threshold for Form 13F reporting since adoption of the Form over 40 years ago. The proposal would relieve most investment managers from their current Form 13F filing burdens.

Exchange Act Section 13(f) currently requires reporting on Form 13F by investment managers with investment discretion over accounts holding certain equity securities (“13(f) securities”) with an aggregate fair market value on the last trading day of a month of at least $100 million. 

Since its adoption, the $100 million threshold for filing Form 13F has not been adjusted to reflect the growth in the overall value of U.S. public corporate equities — an increase from $1.1 trillion to $35.6 trillion according to the SEC. Accordingly, the proposal would raise the reporting threshold to $3.5 billion.

Under the proposal, Form 13F would still cover “over 90% of the dollar value of the holdings data currently reported while eliminating the Form 13F filing requirement and its attendant costs for the nearly 90% of filers that are smaller managers.”

The proposal also includes reviews of the reporting threshold every five years to consider adjustments.

The SEC proposal will be open for a 60-day comment period following its publication in the Federal Register.

SEC Press Release (July 10, 2020)

SEC Proposed Rule

SEC Frequently Asked Questions About Form 13F

OCIE Publishes 2020 Examination Priorities — Key Areas for Investment Advisers

January 16, 2020 Comments Off on OCIE Publishes 2020 Examination Priorities — Key Areas for Investment Advisers

As part of its annual identification of examination priorities, the SEC’s Office of Compliance Inspections and Examinations (OCIE) listed several areas of focus relevant to investment advisers.

OCIE repeated is policy of conducting risk-based examinations for registered investment advisers with a policy to target RIAs that have never been examined — both newly registered RIAs as well as RIAs registered for several years that have yet to be examined.

An additional focus will be examinations of RIAs with retail investors as well as private funds. This continues an emphasis on protecting retail investors generally through reviewing disclosures relating to fees, expenses, and conflicts of interest.

Additional areas of priority include information security risks and anti-money laundering programs.

SEC Approves Repeal of Advertising Prohibition

July 10, 2013 Comments Off on SEC Approves Repeal of Advertising Prohibition

After lengthy delays, the SEC approved final rules to repeal the prohibition on advertising in connection with Rule 506 private placement offerings.  The final rules were modified only slightly from the previously proposed version. The repeal will become effective in early September. « Read the rest of this entry »

Comments Show Divergent Responses to Proposed SEC Advertising Rules

October 30, 2012 § 2 Comments

After multiple delays, the SEC finally proposed rule changes to permit advertising under Rule 506 offerings and invited comments from the public. To date, the SEC has received over 150 of comments which show a wide range of responses to the proposed rule. Given the number and range of responses, we anticipate slow going for adoption of final rules. « Read the rest of this entry »

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