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SEC: QOF Interests Are Typically Securities

Yesterday, the staffs of the North American Securities Administrators Association (NASAA) and the Securities and Exchange Commission (SEC) issued a statement describing the "opportunity zone" program created by the Tax Cuts and Jobs Act.  The intent of the program is to use tax incentives to incentivize capital investment and economic development in the designated economically depressed areas.  A qualified opportunity fund, or QOF, is “any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property.”

The NASAA/SEC statement expectedly focus on the application of federal and state securities laws to QOFs.  Notably, the staffs point out:

"Interests in a QOF offered and sold to investors will typically constitute securities within the meaning of federal and state laws except in limited circumstances (such as a QOF established and operated as a general partnership where each partner has a substantial role in its management)."

The statement also discusses broker, investment adviser and investment company registration requirements.

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume IX, Number 197


About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...