Private Funds Nuts & Bolts: Evolving Custody Rule Considerations for Advisers to Loan Funds and Accounts
The custody rule is challenging in the best and most ordinary of circumstances. Experience with the rule suggests that managers who deal with more esoteric asset classes like loans, which appear not to have been considered with specificity when the rule was adopted and most recently amended, face special challenges.
With limited guidance and facing circumstances where compliance with the rule in orthodox manners creates difficult business and legal questions, such managers have had to make hard choices and improvise creative compliance solutions. A recent no-action letter at least clarifies the manner in which such advisers may have custody when they or an affiliate perform traditional “agent” services with respect to the loans.
In this month's webinar, Dechert partners Michael Sherman and David Vaughan discuss this letter and other considerations.