Jeffrey I. Rosenthal
CPA, CFP, CGMA
Partner, Leader of Anchin's Financial Services Practice
Jeffrey I. Rosenthal, CPA, CGMA is the Leader of Anchin's Financial Services Practice. Jeffrey specializes in providing accounting, tax, and business advice to a wide array of financial services entities including broker/dealers, investment partnerships (domestic and offshore), funds-of-funds, mutual funds, private equity funds, and investment advisors. He has extensive experience advising newly formed entities and assisting with start-up considerations such as form of practice, structure of agreements, compensation arrangements, compliance, and regulatory matters.
Jeffrey frequently lectures on a variety of financial service industry topics, including “Registration and Compliance Issues for Investment Funds,” “Side Pockets Valuations Issues,” “Establishing and Operating a Hedge Fund,” “Planning for your Year-end Audit,” “Fund of Fund Issues and Practices,” “Accounting and Auditing Issues for Hedge Funds,” and “Soft Dollar Arrangements.” Jeffrey has been quoted in various publications including The Wall Street Journal, Business Insider, The Hedge Fund Law Report, and has been featured on Bloomberg Radio.
Jeffrey is a past chairman of the New York State Society Committee on Stockbrokerage Accounting and also serves on its Investment Companies Committee (a charter member) as well as its Investment Management Committee.
He is a member of the American Institute of Certified Public Accountants (AICPA), the New York State Society of Certified Public Accountants (NYSSCPA), the Managed Funds Association (MFA), and the Hedge Fund Association (HFA).
Jeffrey serves on the Committee of Hearts and Grant Making Committees of Hedge Funds Care/Help For Children, a charitable organization dedicated to the prevention and treatment of child abuse. Additionally, he serves on the Foundation of Accounting Education (FAE) Scholarship Committee and is a member of the President’s Advisory Group for Adelphi University.
- Accounting and Auditing
- Financial Services
- Private Equity
- Real Estate Funds
- Testimonial: Jim Cramer
"Over these past 30 years, Jeff’s advice has been invaluable to me and my business ventures, the growth of my fund and the prosperity and peace of mind of my clients.”
- What the SEC’s Amendments to the Definition of “Accredited Investor” Mean for YouSeptember 10, 2020
The amendments will now allow individuals possessing a measure of sophistication based on their professional knowledge and expertise, or certifications to qualify. The amendments also expand the list of entities that qualify as accredited investors by allowing any entity that meets an investments test to qualify. The amendments will become effective 60 days after the SEC’s rule release is published in the Federal Register.
- OCIE Risk Alert: How to Avoid Regulatory Backlash During Prolonged Periods of Remote WorkAugust 27, 2020
In its most recent Risk Alert, the U.S. Securities and Exchange Commission (SEC) Office of Compliance Inspections and Examinations (OCIE) provided guidance on best practices during the prolonged periods of remote work that many firms are experiencing during the COVID-19 pandemic.
- What do the Proposed Carried Interest Regulations Mean for You? August 20, 2020
On July 31, 2020, the Internal Revenue Service (IRS) released proposed regulations (the Proposed Regulations) relating to the scope and applicability of Internal Revenue Code Section 1061. This alert will provide an overview of the Proposed Regulations and how they may affect hedge, private equity and other investment funds.
- The Delaware Supreme Court’s Clarification of Limited Partner Rights to Books and Records, and What It Means for YouAugust 12, 2020
In a recent ruling on the case of Murfey v. WHC Ventures, LLC, the Delaware Supreme Court concluded that a limited partner seeking the books and records of a Delaware limited partnership is not required to show that the materials requested are “necessary and essential” unless those terms are expressly stated in the limited partnership agreement.
- How COVID-19 Impacts Alternative Fund OperationsAugust 10, 2020
COVID-19 has disrupted the alternative assets industry just as it has the rest of the world. Between high market volatility, spooked investors, travel restrictions and rapidly changing government regulation, it certainly is an unusual time to live and to operate in. How have fund managers changed their operations to respond? Preqin recently surveyed alternative fund managers to see what they are doing differently during the COVID-19 pandemic. The survey included hedge funds, private equity funds, venture capital funds, private debt and real estate investors from around the world. Here are some key results.
- OCIE Warns Private Fund Advisers About Common Compliance IssuesJuly 9, 2020
On June 23rd, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert for private fund advisers, including those that manage hedge funds or private equity funds. The report cautioned about common compliance issues that increase fees for investors and put them at risk. OCIE broke these issues down into three categories.
- Key Insights for Fund Managers on Raising Capital in the Current ClimateJune 22, 2020
While raising capital for hedge funds has always been a challenge, the COVID-19 pandemic has made doing so even more difficult. New limits on travel and face-to-face contact are making it difficult to reach investors and complete the required due diligence for fundraising. In this article, we look at how investor expectations have changed in this new environment, and what managers can do to meet these challenges.
- Which Hedge Funds Strategies Performed Best During the Recent Financial Crisis?June 12, 2020
The immediate shock of the COVID-19 crisis sent markets tumbling. In this tough environment, the defensive strategies of hedge funds revealed their value. We looked at the results to see how the industry did overall, along with the fund strategies that performed best during these unusual conditions.
- Guidance on Cyber Threats to Private Equity and Hedge FundsJune 8, 2020
As the corporate world is evolving and becoming more accepting of working remotely, every company is facing the increased threat of cybercrimes. In 2019, the average cost of a data breach in the U.S. was more than $8 million, and the average time spent to identify and contain a breach was around 245 days. These numbers will continue to grow as cyber criminals become even more sophisticated.
- Proposed Carried Interest Regulations Are Back at OIRA for a Second LookJune 5, 2020
The Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) has again received for review, proposed regulations with respect to section 1061— often referred to as the carried interest rules. The battle over carried interest continues as proposed rules are back at the OMB for review after the OMB initially signed off on them in late February 2020.
- Is There Opportunity for Private Equity and Hedge Funds on the Horizon?May 21, 2020
The COVID-19 crisis has devastated the national economy. Tens of millions of Americans have lost their jobs and the stock market has fallen significantly. However, these brutal market conditions may have created an opportunity for private equity funds and hedge funds.
- Hedge Funds and Private Equity Firms Deemed Ineligible for PPP Loans by SBAApril 27, 2020
The same day that legislation (April 24th) increasing funding by $310 billion for the Paycheck Protection Program (“PPP”) was signed into law, the Treasury Department issued a new Interim Final Rule. This Final Rule clarified certain types of businesses that are eligible for PPP loans. Specifically, the Treasury has determined that hedge funds and private equity firms are ineligible businesses for purposes of PPP.
- Private Investment Funds, Related Entities and Individuals Can Benefit From COVID-19 ReliefApril 21, 2020
The COVID-19 pandemic has put significant stress on the liquidity and profits of hedge funds, private equity/venture capital funds and their respective portfolio companies. On March 18, 2020, the Families First Coronavirus Response Act and on March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) were signed into law. Given these uncertain times and the multitude of changes, provisions and opportunities these laws present, we’ve prepared a general summary of certain relevant matters that private investment funds, related entities and individuals should consider in order to help navigate this crisis. Accordingly, please use this guide for general information purposes only, and please reach out to us with any specific questions or issues you have.
- A Message from Anchin's Financial Services GroupApril 15, 2020
We here at Anchin hope that you and your loved ones are healthy and staying safe during these trying times. Our team has been closely monitoring the latest COVID-19 developments, particularly the recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act and Paycheck Protection Program Loans (“PPP”). As a resource, we recommend you visit our COVID-19 Update Center which is updated daily and features a wide variety of informational articles about new programs, many of which are applicable to the Financial Services industry.
- The Cayman Islands Launch New Legislation for Private and Mutual FundsMarch 4, 2020
The Cayman Island government recently passed new laws for private and mutual funds, designed under recommendations from the European Union (“EU”) and other international governments. They created these regulations to increase oversight and confidence in Cayman Islands funds, while still making it a popular jurisdiction for fund formation. This article covers the upcoming requirements under these laws along with when they will go into effect. One should be aware that the Cayman Islands government defines “Mutual Funds” and “Private Funds” slightly differently than we would in the U.S., so we’ve attempted to clarify, below.
- Don’t underestimate costs and need for planning - Interview with Jeffrey I. RosenthalJanuary 30, 2020
Anchin's Financial Services Practice Leader Jeffrey I. Rosenthal explains how to mitigate the challenges of launching a hedge fund with preparation, planning, and asking the right questions in Hedgeweek's U.S. Hedge Fund Startup Guide 2020.
- The Seven SEC Compliance Examination Priorities for 2020January 28, 2020
At the start of every year, the SEC Office of Compliance Inspections and Examinations (OCIE) announces a list of its priorities for the next examination cycle. These represent the areas they feel are key sources of risk for investors and markets. For 2020, they named seven focus areas.
- SEC Annual Report Shows Record Enforcement of Asset Management IndustryJanuary 17, 2020
Near the end of each year, the SEC’s Enforcement Division publishes a report listing their past actions along with future priorities. They recently released their 2019 report and what stands out is last year’s record enforcement of the asset management industry. We’ve summarized the most important parts of the report here.
- Expanded Accredited Investor Definition Could Be Coming SoonJanuary 16, 2020
If someone wants to invest in SEC-exempt private market assets, like hedge funds and venture capital funds, they must meet the SEC’s standards as an accredited investor. The SEC limits who can invest in these assets because they believe non-accredited investors do not have the sophistication or knowledge to understand these investments, or their risks.
However, these markets could be opening soon. On December 18th, 2019, the SEC commissioners voted three to two for expanding the accreditation scope to include more potential investors. Here’s what could be changing.
- IRS Issues Notice Delaying Certain Aspects of Partnership Reporting RequirementsDecember 12, 2019
With Notice 2019-66 (“Notice”), issued on December 9, the IRS reversed course and is delaying some partnership reporting requirements that were outlined in our earlier alert after many practitioners contended that they would not be able to comply under such a tight timeframe. The Notice provides that the requirement to report partners’ shares of partnership capital on the tax basis method will not be effective for 2019 (for partnership taxable years beginning in calendar 2019) but will be effective starting in 2020 (for partnership taxable years that start on or after Jan. 1, 2020). Instead, for 2019, partnerships and other persons must report partner capital accounts consistent with the reporting requirements in the 2018 forms and instructions, including the requirement to report negative tax basis capital accounts on a partner-by-partner basis. These partnerships and other persons must include a statement identifying the method upon which a partner’s capital account is reported. The final instructions for the 2019 forms are expected to include additional details on how such reporting should be done.
- 2019 Financial Services Year-End Tax Planning AlertDecember 5, 2019
As we continue to monitor the prospects of regulations, guidance and potential new tax reform and as year-end approaches, you should consider the following opportunities as you review your tax picture.
- SEC Considers Opening Private Equity to Main Street Investors. Good Idea?December 3, 2019
Private equity has been one of the top performing asset classes over the past decade. However, due to current regulations, the typical American investor hasn’t been able to participate in these gains. That could change soon. Earlier this year, the SEC asked for public comment about whether it should open private equity investments to retail investors. Here are some of the pros and cons of the agency doing so.
- Recently Released Draft Partnership Instructions and Schedule K-1 Raise QuestionsNovember 14, 2019
The newly released draft 2019 partnership tax return instructions and Schedule K-1 reflect changes resulting from the Tax Cuts and Jobs Act (TCJA), as well as from other IRS initiatives. This article will highlight some of those changes, with a focus on new IRS reporting requirements related to their effort to track partners’ tax basis capital.
- How Can Hedge Funds Raise Capital More Effectively?August 21, 2019
Raising capital for a hedge fund is a process. At a time when the industry has seen four straight quarters of capital outflows, it’s more important than ever for fund managers to know how, where and why they will attract investors. By understanding the mindset of investors as well as their concerns, you can improve your fund raising results.
- SEC Explores Softening Accredited Investor StandardsJuly 11, 2019
On June 18th, the SEC issued a comment release for feedback on possibly loosening the accredited investor definition. This would potentially allow more investors to contribute to private funds and other restricted investments. Here’s what they’re considering and what could happen next.
- The OCIE Lays Out Six Examination Priorities for 2019January 11, 2019
Every year, the SEC’s Office of Compliance Inspections and Examinations (OCIE) publishes a report listing their priorities for upcoming examinations. For 2019, they will focus their attention on six categories.
- 2018 Financial Services Year-End Tax Planning AlertDecember 19, 2018
With the passage of the Tax Cuts & Jobs Act (the “Tax Act”) in December of 2017, the impact on funds, their owners/managers and investors has been anything but clear. The Tax Act was rushed into law, is extremely complex and still has many unanswered questions to unclear sections of the new law. However, unlike last year at this time, we do not foresee any new tax legislation before year-end 2018 nor is it clear that guidance or technical corrections will be forthcoming to address some of the open questions affecting funds, fund managers and their investors.
- Cybersecurity for Investment Partnerships, Private Equity and Real Estate Funds - Responding to a Growing ThreatJuly 30, 2018
Investment partnerships, private equity and real estate funds are tempting targets for cybercriminals thanks to their financial assets, sensitive customer information, and access to institutional counterparts. And the threat is growing quickly. Recent studies report that fifty five percent of limited partners in private equity funds expect a serious cyberattack on their firms within the next five years. How can you keep your fund safe? Let’s take a look at the current threats and latest recommendations from the SEC.
- Department of Commerce Form BE-12 Benchmark Survey of Foreign Direct Investments in the United States May be Required for U.S. Fund ManagersMay 22, 2018
Form BE-12 (Benchmark Survey of Foreign Direct Investments in the United States) is required to be filed every fifth year, in place of Form BE-15 (which is for annual reporting that falls outside of the five-year reporting). This Form is filed with the U.S. Department of Commerce’s Bureau of Economic Analysis (“BEA”). The next Form BE-12 filing is due on May 31, 2018 (June 30, 2018 if using the BEA’s e-file system).
- SEC Announces 2018 Compliance Examination PrioritiesFebruary 16, 2018
As they have for many years, the SEC announced its 2018 Office of Compliance Inspections and Examinations (OCIE) examination priorities.
- Tax Court Ruling That Family Office Carried on a Trade or Business May Offer Tax Planning Opportunities February 5, 2018
On December 13, 2017, in Lender Management, LLC v. Commissioner, the U.S. Tax Court ruled that a family office, Lender Management, LLC (“Lender Management”), carried on a trade or business as an investment manager rather than as a passive investor and was therefore entitled to deduct expenses under §162 (“deductible above-the-line with no income limitation”) vs. §212 (“miscellaneous itemized deductions subject to the 2% of adjusted gross income (AGI) floor”).
- Tax Cuts and Jobs Act: Key provisions affecting Hedge Funds, Private Equity Funds and Other Investment Funds or Fund VehiclesJanuary 17, 2018
The Tax Cuts and Jobs Act (the “Tax Act”), which was signed into law on December 22, 2017, enacts a broad range of changes with most provisions taking effect for tax years beginning after December 31, 2017. This alert summarizes some of the key (federal) tax provisions of the Tax Act affecting managers of hedge funds, private equity funds and other investment funds or fund vehicles.
- The Tax Cuts and Jobs Act Overrides the Tax Court Decision in Grecian Magnesite Mining While the IRS Seeks to Appeal the Same DecisionDecember 28, 2017
In a decision handed down in the summer, the U.S. Tax Court refused to accord deference to an Internal Revenue Service (IRS) administrative ruling treating the sale of partnership interests as the sale of assets the partnership uses in a U.S. trade or business, thereby subjecting the resulting gain to taxation as income effectively connected with a U.S. trade or business. The recently passed tax reform law overrides the Tax Court decision. Meanwhile, the IRS intends to appeal against the same decision.
- CFTC Suggests It Has Broader Jurisdiction Over Virtual Currencies, Including ICOsDecember 13, 2017
The Commodity Futures Trading Commission (CFTC) recently published a primer to educate the public on virtual currencies. In the explanation, the CFTC outlined its position regarding its role regulating virtual currencies. The primer suggests that the CFTC sees itself having jurisdiction over certain virtual currency transactions, including Initial Coin Offerings (ICOs).
- How the Senate Tax Bill Could Cost YouDecember 11, 2017
A provision in the Senate’s tax plan would take away an investor’s ability to specifically identify which stock shares they relieve when they go to sell their holdings. The provision would require investors selling a portion of a position in stock to sell their oldest shares first, also known as first-in-first-out, or FIFO. This provision is slated to take effect on stock sales starting on January 1, 2018 and is estimated to increase government revenue by $2.7 billion over the next 10 years. The House tax bill, released in early November 2017, did not address this topic.
- 2017 Financial Services Year-End Tax Planning AlertDecember 6, 2017
With Donald Trump in the White House and Republicans maintaining a majority in Congress comes the real possibility of some dramatic changes in tax law.
- SEC Rules that Digital Assets Can Be Treated as Securities, Fall Under Federal Securities LawOctober 10, 2017
Since their launch, cryptocurrencies and other digital assets have operated in a regulatory grey area. Should they be treated as currencies? Securities? As something completely different? In a July report, the SEC clarified the situation and set a new precedent: Digital assets can be treated as securities and fall under federal securities law.
- Top Lessons from the 2017 SEC Cybersecurity ReportOctober 2, 2017
Cybersecurity continues to be a top priority for the SEC. They recently reviewed 75 firms, including broker-dealers, investment advisers, and investment companies, to see what the financial industry is doing well related to cybersecurity, as well as what needs to be improved. Firms should use this information to evaluate and improve their own protection of client data and be aware of these issues which the SEC will be on the lookout for during future inspections.
- Tax Court Refuses to Follow Rev. Rul. 91-32 in Grecian Magnesite Mining DecisionAugust 23, 2017
In a recent decision, the U.S. Tax Court refused to accord deference to an Internal Revenue Service (IRS) administrative ruling treating the sale of partnership interests as a sale of assets the partnership uses in a U.S. trade or business, thereby subjecting the resulting gain to taxation as income effectively connected to a U.S. trade or business.
- Proposed Carried Interest Bills Still AliveJuly 10, 2017
Earlier this year, we shared information with you about several proposed bills that would increase taxes due on investment performance allocations, commonly known as carried interest. Carried interest is the share of profits that fund managers receive in exchange for managing investments. The controversy over carried interest arises because the current tax rules allow managers to pay taxes on portions of the carried interest allocation at the (long term) capital gains rate rather than the higher tax rate that normally applies to ordinary income.
- SEC Clarifies Three Confusing Situations For The Custody RuleMay 25, 2017
The SEC’s Custody Rule continues to be a headache for registered investment advisers. The conditions are so unclear, it’s easy to inadvertently trigger custody rule violations. To help advisers adjust, the SEC recently issued clarification for three confusing situations under the rule.
- SEC Identifies Top 5 Compliance Issues Found in OCIE ExaminationsApril 6, 2017
Call it a wake-up call for registered investment advisers—the Securities and Exchange Commission (SEC) issued a Risk Alert, highlighting the top five compliance issues found in deficiency letters sent to SEC-registered investment advisers.
- Tax Update: Proposed Bill Closing Tax Loophole Could be a Boon for Connecticut; IRS Recent Audit Targeting Management Fee WaiversMarch 30, 2017
The Connecticut state legislature earlier this year proposed a bill that would slap a new 19 percent tax on investment management services fees, also known as “carried interest.” Similar bills are planned, or have been introduced, in other states including New York, New Jersey, Massachusetts and Rhode Island. The Connecticut bill would only be effective if similar bills are passed in these other states.
- Connecticut Bill Seeking 19% State Surcharge on Hedge Funds Has a TwistMarch 9, 2017
Bruce McGuire, president of the Connecticut Hedge Fund Association, was attending the Managed Funds Association annual meeting earlier this year in Miami when he started chatting with some of his colleagues about the potential impact of recently proposed legislation in Connecticut that would slap a 19 percent surcharge on hedge funds based in the Nutmeg State.
- 2017 SEC Examination Priorities Feature Three New Areas of FocusFebruary 2, 2017
As they have done annually for the last several years, the Securities and Exchange Commission has announced their Examination Priorities.
- As Curtain Falls on Deferral Era, Investment Fund Managers Brace for ChangesJanuary 25, 2017
This is not a test. It’s been a long time coming, but the deferral era is about to end. Not with a bang or a whimper, but investment fund managers are scrambling to ensure that any significant amount of pre-2009 deferred fees owed to them are payable during the next 12-13 months. Their livelihoods depend on it.
- Follow the Bouncing Ball: Newly Revised Cybersecurity Regulations Scheduled for March 1 in New YorkJanuary 17, 2017
Newly revised cybersecurity regulations for financial service companies in New York are scheduled to take effect March 1, 2017. The effective date for the new rules follows a two-month delay, as the New York State Department of Financial Services (“NYDFS”) made changes to the proposed regulation due to industry concerns.
- Preparing for Revised Form ADV Taking Effect in 2018December 29, 2016
Registered investment advisers have started to brace for 2017. They’re creating new offerings and expanding the breadth of their portfolios. However, investment advisers need to think well beyond next year, to the first quarter of 2018. Their livelihoods depend on it.
- Financial Services Companies Brace for New Cybersecurity RequirementsDecember 14, 2016
The New York State Department of Financial Services is taking the bull by the horns when it comes to how regulated financial services companies protect themselves and their customers from cyberattacks.
- Anchin, Block & Anchin Recognized as Best North American Accounting Firm in Hedgeweek USA AwardsSeptember 23, 2016
New York-based Top 100 accounting and advisory firm Anchin, Block & Anchin LLP has once again been named the Best North American Accounting Firm in the annual Hedgeweek awards. This award reinforces Anchin’s status as a leader in the Financial Services industry.
- Net Worth Threshold for “Qualified Clients” Increased by SECJuly 28, 2016
The U.S. Securities and Exchange Commission (“SEC”) has decided to increase the net worth test threshold for “qualified clients” effective August 15, 2016.
- Financial budgeting: One chance to succeedMay 16, 2016
Jeffrey I. Rosenthal, Partner-in-Charge of Anchin's Financial Services Practice talks about planning a hedge fund launch.
- Chapter 1: Legal & tax structuringMay 16, 2016
Jeffrey I. Rosenthal, Partner-in-Charge of Anchin's Financial Services Practice explains some of the criteria for making fund structuring decisions.
- Anchin, Block & Anchin Recognized as Best Global Accounting Firm for Sixth Consecutive Year in Hedgeweek AwardsMarch 9, 2016
Top tier accounting firm Anchin, Block & Anchin LLP has received Hedgeweek’s Best Global Accounting Firm award for the sixth consecutive year.
- New Tax Audit Rules Constitute a Radical Change for PartnershipsJanuary 27, 2016
Late in 2015, Congress passed the Bipartisan Budget Act of 2015 (the Act), which includes a complete overhaul of the procedures that apply to Internal Revenue Service (IRS) audits of partnerships and limited liability companies (LLCs) taxed as partnerships and their partners.
- 2016 SEC & FINRA Exam PrioritiesJanuary 25, 2016
The Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) have released their Exam Priorities for 2016. Each of the regulators have organized their focus around a number of key issues.
- 2015 SEC Examination Priorities AnnouncedJanuary 20, 2015
Last week, the SEC announced its examination priorities for 2015. Three themes highlighted the areas of focus for the SEC’s Office of Compliance Inspections and Examinations ("OCIE"): Protection of retail investors and investors saving for retirement, assessing market-wide risk and using enhanced data analysis to identify those engaged in potential illegal activity.
- Hedge Fund Compliance: Best Practices September 6, 2016
What steps can hedge funds take, especially in the start-up phase, to set themselves up for success? Jeffrey I. Rosenthal, Partner-in-Charge of Anchin, Block &
- Start-Up Hedge Fund Managers February 14, 2016
Anchin, Block & Anchin LLP Partner Jeffrey Rosenthal talks about Start-Up Hedge Fund Managers.
- Client Retention February 14, 2016
Anchin, Block & Anchin LLP Partner Jeffrey Rosenthal discusses Client Retention.