IMpact: Investment Management News

Welcome to IMpact: Investment Management News. In this regular bulletin, DLA Piper lawyers share their insights on key developments that are impacting the investment management industry.

1. Entity formation considerations: Looking beyond Delaware

In recent years, numerous companies have elected to use Nevada as the state of choice for entity formation, marking a shift from the traditional hub of Delaware. This trend, sometimes referred to as “Dexit,” also includes several investment managers and venture capital (VC) firms. Nevada is a desirable state of incorporation to certain corporations and fund managers because of its favorable privacy and confidentiality protections; asset protection and liability shields; and contractual flexibility with a legal framework that is more statute focused, and less case law driven. Delaware largely remains a go-to jurisdiction for investment funds that are marketing to institutional investors for numerous reasons, including parties’ familiarity with Delaware law, which could reduce execution risk and increases the speed of negotiations. Depending on investment strategy and investor base, fund managers – particularly those with heightened concerns around the points mentioned above – may alternatively consider Nevada as a state of incorporation.

2. Applicability of Reg S-P to private funds remains uncertain

With the rapidly approaching December 3, 2025 compliance date for the amendments to Regulation S-P adopted by the United States Securities and Exchange Commission (SEC) last year, institutional fund managers with an SEC-registered investment adviser may consider whether updates to their reporting and notice procedures are necessary. The adopting release leaves applicability to private fund managers unclear: It states that Reg S-P does not apply to private funds, but also notes that “Private funds that are able to rely on section 3(c)(1) or 3(c)(7) of the Investment Company Act are not subject to Regulation S-P but they may be subject to the FTC Safeguards Rule,” which would include similar incident response requirements. Some industry players hoped to see SEC guidance clarifying the extent to which Amended Reg S-P is intended to apply to private funds (and their investors). However, it is unclear whether such guidance will be forthcoming in time for the compliance date, if at all – particularly in light of the government shutdown. Institutional fund managers are encouraged to consult with their counsel to determine whether they may hold data about natural person investors that is equivalent to “customer information” under Amended Reg S-P. 

3. Compliance with New York version of CTA begins January 1, 2026

The US Corporate Transparency Act (CTA) was limited early this year to apply to exempt domestic entities and beneficial ownership information of US persons, among other modifications. In addition, the state of New York enacted the New York LLC Transparency Act (NY Act), which is largely based on the CTA but only applicable to LLCs formed or qualified to do business in New York. The NY Act is currently scheduled to have a January 1, 2026 compliance date with respect to newly formed or qualified LLCs in New York and an extended filing deadline of January 1, 2027 for LLCs formed or qualified in New York prior to January 1, 2026. The New York State Senate passed a bill to recapture the domestic LLCs that were exempted from the CTA, but the bill has yet to be signed into law. There remains additional uncertainty regarding the NY Act stemming from a lack of administrative rules or guidance and the fact that the electronic filing system through which LLCs are expected to comply with their filing requirements, including the obligation for exempt LLCs to file an attestation of exemption, has not been finalized.

4. Retail fund strategies continue to gain momentum

While many large sponsors already have established retail offerings, a broader range of general partners (GPs) are actively exploring this channel. In doing so, sponsors are evaluating a variety of structural approaches – including interval funds, business development companies, and feeder platforms – and building out distribution capabilities to reach a wider investor base. This trend is drawing increased attention from institutional limited partners (LPs), who focus on how managers balance retail growth with traditional fund mandates. GPs may anticipate heightened diligence from institutional LPs regarding retail strategies, particularly around conflicts of interest and potential liquidity mismatches. LPs may also request enhanced reporting and disclosure on retail vehicles and seek guardrails around co-investment activity between retail products and a sponsor’s closed-ended funds.