The Insider's Guide to Securities Law: Navigating the Intricacies of Public and Private Offerings

The Insider's Guide to Securities Law

Navigating the Intricacies of Public and Private Offerings

Josh Luberisse

Fortis Novum Mundum

Copyright © 2023 Fortis Novum Mundum

All rights reserved

The characters and events portrayed in this book are fictitious. Any similarity to real persons, living or dead, is coincidental and not intended by the author.

No part of this book may be reproduced, or stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without express written permission of the publisher.

No guarantee of any kind is implied or possible where projections of future conditions are attempted.

None of the content published constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter.

By reading this book, the reader agrees that under no circumstances is the author responsible for any losses, direct or indirect, which are incurred as a result of the use of the information contained within this manuscript, including but not limited to errors, omissions, or inaccuracies.

Cover design by: Fortis Novum Mundum

DISCLOSURE

This communication is for informational purposes only, and contains general information only. The author, Fortis Novum Mundum, LLC. and Other People’s Capital, LLC. are not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. The author, Fortis Novum Mundum, LLC. and Other People’s Capital, LLC.  do not assume any liability for reliance on the information provided herein.

DISCLAIMER

Any content provided herein should not be relied upon as advice or construed as providing recommendations of any kind. It is your responsibility to confirm and decide which trades to make.

Trade only with risk capital; that is, trade with money that, if lost, will not adversely impact your lifestyle and your ability to meet your financial obligations.

Past results are no indication of future performance.

In no event should the content of this correspondence be construed as an express or implied promise or guarantee.

Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. Futures, stocks and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures, stocks and options may fluctuate, and, as a result, clients may lose more than their original investment.

The impact of seasonal and geopolitical events is already factored into market prices. The highly leveraged nature of futures trading means that small market movements will have a great impact on your trading account and this can work against you, leading to large losses or can work for you, leading to large gains.

The author of this book is not responsible for any losses incurred as a result of using any of our trading strategies.

Loss-limiting strategies such as stop loss orders may not be effective because market conditions or technological issues may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as spread or straddle trades may be just as risky as simple long and short positions. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed.

No guarantee of any kind is implied or possible where projections of future conditions are attempted.

None of the content published constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter.

By reading this book, the reader agrees that under no circumstances is the author responsible for any losses, direct or indirect, which are incurred as a result of the use of the information contained within this manuscript, including but not limited to errors, omissions, or inaccuracies.

Contents

Title Page

Copyright

DISCLOSURE

DISCLAIMER

Table of Contents

Preface

Part I: Introduction to Private Equity and Venture Capital

Chapter 1: The World of Private Equity and Venture Capital

Part II: Fund Formation and Structuring

Chapter 2: Fund Formation Basics

Chapter 3: Tax Considerations

Part III: Regulatory Framework and Compliance

Chapter 4: Key US Regulatory Authorities

Chapter 5: Investment Advisers Act and the Advisers' Fiduciary Duty

Chapter 6: Securities Laws and Regulations

Chapter 7: Anti-Money Laundering (AML) and Know Your Customer (KYC) Compliance

Part IV: Fund Operations and Portfolio Management

Chapter 8: Deal Sourcing and Due Diligence

Chapter 9: Transaction Structuring and Execution

Chapter 10: Portfolio Management and Value Creation

Part V: Exits and Liquidity Events

Chapter 11: Exit Strategies and Liquidity Events

Chapter 12: Regulatory Aspects of Exits

Conclusion

Index

Appendix: Glossary of Key Terms

Acknowledgement

About The Author

Books By This Author

Table of Contents

Preface

Part I: Introduction to Private Equity and Venture Capital

Chapter 1: The World of Private Equity and Venture Capital

1.1. Private Equity Overview

1.2. Venture Capital Overview

1.3. Key Players and Stakeholders

1.4. Investment Strategies and Stages

Part II: Fund Formation and Structuring

Chapter 2: Fund Formation Basics

2.1. Legal Entities and Structures

2.2. Limited Partners and General Partners

2.3. Fund Terms and Agreements

Chapter 3: Tax Considerations

3.1. Taxation of Private Equity and Venture Capital Funds

3.2. Tax Structuring and Strategies

3.3. International Tax Implications

Part III: Regulatory Framework and Compliance

Chapter 4: Key US Regulatory Authorities

4.1. Securities and Exchange Commission (SEC)

4.2. Financial Industry Regulatory Authority (FINRA)

4.3. Commodity Futures Trading Commission (CFTC)

4.4. State Securities Regulators

Chapter 5: Investment Advisers Act and the Advisers' Fiduciary Duty

5.1. Registration and Exemptions

5.2. Compliance Requirements and Best Practices

5.3. Fiduciary Duty and Conflicts of Interest

Chapter 6: Securities Laws and Regulations

6.1. Securities Act of 1933

6.2. Securities Exchange Act of 1934

6.3. The Investment Company Act of 1940

6.4. The JOBS Act and Emerging Growth Companies

Chapter 7: Anti-Money Laundering (AML) and Know Your Customer (KYC) Compliance

7.1. AML Laws and Regulations

7.2. KYC Requirements

7.3. Implementing AML and KYC Policies and Procedures

Part IV: Fund Operations and Portfolio Management

Chapter 8: Deal Sourcing and Due Diligence

8.1. Deal Flow and Networking

8.2. Legal and Financial Due Diligence

8.3. Industry-Specific Due Diligence

Chapter 9: Transaction Structuring and Execution

9.1. Deal Terms and Negotiation

9.2. Financing and Capital Structure

9.3. Closing and Post-Closing Considerations

Chapter 10: Portfolio Management and Value Creation

10.1. Operational Improvements and Growth Strategies

10.2. Monitoring and Risk Management

10.3. Environmental, Social, and Governance (ESG) Considerations

Part V: Exits and Liquidity Events

Chapter 11: Exit Strategies and Liquidity Events

11.1. Initial Public Offerings (IPOs)

11.2. Mergers and Acquisitions

11.3. Secondary Sales and Recapitalizations

Chapter 12: Regulatory Aspects of Exits

12.1. Securities Law Considerations in Exits

12.2. Tax Implications of Exit Transactions

12.3. Antitrust and Competition Regulations

Conclusion

Appendix: Glossary of Key Terms

Index

Preface

The world of private equity and venture capital is at once exciting and complex, offering the potential for significant financial returns but also demanding a deep understanding of legal and regulatory complexities. In the dynamic landscape of today's global economy, navigating this world requires not just financial acumen, but also a solid grasp of the many rules and regulations that govern it.

The Insider's Guide to Securities Law: Navigating the Intricacies of Public and Private Offerings is designed to serve as a comprehensive guide for those looking to understand the intricacies of the private equity and venture capital space, whether they are legal practitioners, investment professionals, or aspiring entrepreneurs. This book provides a deep dive into the various aspects of fund formation, regulatory considerations, deal structuring, and exit strategies.

Throughout the book, we take an in-depth look at the legal and regulatory considerations that underpin every stage of a private equity or venture capital transaction. We begin with an overview of the world of private equity and venture capital, including a discussion of the various players and structures in this space. We then delve into the nuts and bolts of fund formation, from selecting the right legal entity to