USA Law and Practice Contributed by: Scott Naidech, Basil Godellas, Olga Loy and Beth Kramer, Winston & Strawn
Winston & Strawn 35 W. Wacker Drive Chicago IL 60601-9703 USA Tel: (312) 558 3769 Fax: (312) 558 5700 Email: snaidech@winston.com Web: www.winston.com/en
1. General 1.1 General Overview of Jurisdiction
2. Funds 2.1 Types of Alternative Funds and Structures Alternative funds are formed to accommodate a varie - ty of investment strategies. The strategies of “closed- end” private funds will typically be structured to target investments in one or more segments of a company’s capital stack (eg, venture capital funds, growth equity funds, buyout funds, distressed funds or credit funds). Open-ended funds will generally permit investors to invest in or redeem from the fund periodically, often subject to restrictions such as redemption gates or lock-ups. Open-ended funds will typically pursue a more liquid portfolio, although these structures can also be designed to accommodate illiquid invest - ments (eg, using a “side pocket” structure). Both closed- and open-ended alternative funds formed in the USA will typically involve several key entities, including: • Funds: Funds targeting US investments typically will be formed as Delaware limited partnerships or limited liability companies. Depending on the tax needs of the investors, US and non-US investors may invest in these structures directly or indirectly via one or more feeder vehicles or in parallel funds or other alternative fund structures. In the USA, Delaware is widely known as the “go-to” jurisdic - tion for entity formation given, among other things, its wide recognition, well-developed body of case law, robust legal protections, freedom to contract, and low startup costs (with Texas and Nevada gaining recognition for many of the same reasons).
The United States is the world’s largest and most pre - dominant jurisdiction for the formation of alternative funds and boasts the largest number of alternative asset managers in the world. In recent U.S. Securities and Exchange Commission (SEC) filings, investment advisers have reported more than USD25 trillion in private fund gross asset value, amongst tens of thou - sands of funds. Under the US federal securities laws, US investment advisers are governed by a robust regulatory frame - work. In addition, the US federal securities laws cover many aspects of fund formation and the offerings of fund interests. Other US federal and state rules may apply depending on a number of factors, including the nature of the fund’s investment activities and/or the advisory activities of an investment adviser. 1.2 Key Trends The regulatory landscape for private funds is com - plex, but many rules proposed by the SEC and other regulatory authorities have either been rescinded or postponed in 2025. Significant new rules from recent years are still in force, which include those relating to the protection of customer information and advertisements and marketing communications. Proposed rules that have been rescinded or delayed include those relating to beneficial ownership report - ing, addressing conflicts of interest in predictive data analytics, the safeguarding of customer assets, out - sourcing, cybersecurity risk management, status as a “dealer” and anti-money laundering.
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