Kurt: Let’s start with a very simple question. Who is advising the investment vehicle entity? Lori, when we say entity, what do we mean?
Lori: It's typically an entity or a person, but generally the entity is acting as a general partner or the managing member of a limited partnership or a limited liability company which is investing in something that could be considered an underlying security.
That general partner or managing member might be considered to be an investment advisor by the SEC or certain states, if that person is providing investment advice, picking the security or supervisory services of the security with regard to the funds, (the limited partnership or the limited liability company).
Kurt: Cathy, could you talk a little bit about ‘regular and continuous supervisory or management services’ as stipulated in the regulations?
Cathy: Believe it or not, this is a key issue because it impacts whether or not a general partner or managing member are going to be subject to SEC registration rules or, alternatively, be subject to their state's investment advisor registration rules.