Delaware fund solution: Licensing & Privacy
With regard to the Delaware fund solution, we have a question from a conversation with another prospect for around USD 50 million with initially one underlying. Does this portfolio format, as in a family office solution, also require a licensed promoter to be engaged if only non-bankables (PE/PD) are involved and no distribution to external parties is intended?
Keith: In the U.S., the general rule is that individuals or entities promoting or selling investment funds (such as mutual funds, hedge funds, and private equity funds) must be licensed, regardless of the state in which they operate, including Delaware. This requirement stems from federal securities laws and regulations, which apply nationwide, as well as state-specific regulations that generally align with federal standards.
In this case, our lead would be from South America and most likely has his assets in the USA. As I was told by a colleague, the client wants to invest in LatAm but does not want his name to appear as an investor. Do you or Keith see a problem with this case in relation to the Delaware Fund?
Keith: It is common for individual investors to subscribe through a financial intermediary such as Charles Schwab. There is no requirement for the beneficial owner’s name to be displayed in the investor name or account title however as we know this does not negate the requirement for the intermediary and the fund to comply with KYC and AML requirements to verify the identity of the beneficial owners.