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Blue Sky Filings & COVID-19 Considerations

As a general rule, private funds that rely on an exemption from registration under Rule 506 of Regulation D of the Securities Act (including offshore funds) have to submit a blue sky filing no later than 15 days after the date of first sale to an investor in each state where investors reside.  Given the SEC’s exemptive relief from certain regulatory filing deadlines for investment advisers in response to the COVID-19 pandemic, private funds may be wondering if states are offering similar relief for blue sky filing obligations.

Some states are providing relief by not imposing penalties on late blue-sky filers due to COVID-19 related delays.  However, most states accept blue-sky filings electronically, and even where paper filings are still required, we do not recommend that private funds leverage this relief absent extreme circumstances.

Instead, we recommend that firms continue to make required regulatory filings, including those pertaining to state blue sky filings, as scheduled during this pandemic.  Although the SEC has stated publicly it will not target firms that rely on its conditional exemptive relief related to COVID-19, we believe that failure to meet filing deadlines could signal to regulators that there are flaws in the firm’s business continuity plans.

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Partner with Hardin Compliance

Hardin is here to assist advisers to private funds in any way that we can.  Should you need assistance temporarily, or on a more permanent basis, please visit Hardin’s Blue Sky Filing Service for more information or contact the Blue Sky Filing Team at blueskyteam@hardincompliance.com.

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Hardin Compliance Consulting provides links to other publicly-available legal and compliance websites for your convenience. These links have been selected because we believe they provide valuable information and guidance.  The information in this e-newsletter is for general guidance only.  It does not constitute the provision of legal advice, tax advice, accounting services, or professional consulting of any kind.

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