News

Form BE-180 Filing Due No Later Than November 1, 2015

September 25, 2015

Filing Required to be Made by Certain U.S. Investment Funds and Advisers

Filing Requirement Affects Managers of Certain Hedge Funds, Private Equity Funds, Etc.

Certain U.S. financial service providers and intermediaries, including certain investment funds and advisers, will be required to file a Form BE-180, Benchmark Survey of Financial Services Transactions Between U.S. Financial Services Providers and Foreign Persons, with the U.S. Bureau of Economic Analysis (BEA) no later than November 1, 2015.
 
What is Form BE-180?
 
The BE-180 is a form used by the BEA to conduct a benchmark survey every five years.  The survey collects information with respect to “financial services” transactions between U.S. “financial services providers” and foreign persons (including foreign affiliates, such as offshore funds).  This year’s survey collects information with respect to 2014.   
 
Who may have to report?
 
U.S. providers of “financial services,” which include but are not limited to financial advisory and management services such as managing and operating hedge funds, private equity funds, commodity pools and other investment vehicles and certain intermediaries.   Therefore, all U.S. investment managers as well as all domestic hedge funds, private equity funds, commodity pools and other investment vehicles will be required to file Form BE-180 if their purchases from or sales to foreign persons of such services exceed the applicable reporting threshold.
 
What is the reporting threshold?
 
A BE-180 is required to be completed by all U.S. financial service providers and intermediaries whose aggregate purchases from or sales to foreign persons of financial services exceeded $3,000,000 for fiscal year 2014 either individually or on a consolidated basis for their organization.  Because the $3,000,000 threshold applies separately to sales and purchases, the reporting requirement may apply with respect to sales, purchases or both.
 
Which payments may be reportable by the “typical” U.S. financial services provider or intermediary (such as a private investment fund)?
 
Captured purchases and sales include, among others:

  • payment or receipt of management fees to or from foreign persons; and
  • payment or receipt of incentive allocations to or from foreign persons.

Excluded payments include:

  • interest and dividend receipts and payments;
  • earnings from buying or selling financial instruments;
  • distributions by U.S. funds to foreign investors of the proceeds of fund investments; and
  • payments by U.S. funds to foreign sellers in connection with the purchase of investments.

Examples of treatment of certain payments received by U.S. financial services providers:

  Domestic Fund Offshore Fund Domestic Investor Offshore Fund Investor[1] Offshore Separate Account Investor
Receipt of management
fee from:
Not captured Captured Not captured Not Captured Captured
Receipt of incentive allocation/carry from: Not captured Captured Not captured Not Captured Captured

 
Examples of treatment of certain payments made by U.S. financial services providers:

  Domestic Fund Offshore Fund Domestic Adviser Offshore Adviser
Payment of  management
fee to:
Not captured Captured Not captured Captured
Payment of incentive allocation/carry to: Not captured Captured Not captured Captured

 
 The initial deadline for filing the BE-180 was October 1, 2015, however this deadline has been automatically extended by the BEA until November 1, 2015.  Additional extensions may be available under certain circumstances. 
 
Form BE-180, instructions for the form and related information can be found on the BEA’s website, here:  http://www.bea.gov/ssb/be180/.

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If you have questions concerning Form BE-180 or other compliance matters, or would like more detailed information, please do not hesitate to contact any of the attorneys referenced below.

Erik A. Bergman
(203) 325-5026 or ebergman@fdh.com

Matthew S. Eisenberg
(203) 325-5084 or meisenberg@fdh.com

Harold B. Finn III
(203) 325-5029 or hfinn@fdh.com

Richard D. Kilbride
(203) 325-5075 or rkilbride@fdh.com

Reed W. Balmer
(203) 325-5011 or rbalmer@fdh.com


Justin J. Shigemi
(203) 325-5065 or jshigemi@fdh.com
 
[1] The instructions to Form BE-180 indicate that US advisers should not report management fees they are paid for managing US funds except to the extent that they are charged directly to a foreign investor.  For these purposes, incentive allocations are considered management fees.  The BEA has separately indicated that a management fee or incentive allocation that is paid to an adviser of a US fund in respect of a foreign investor’s investment in the fund will not be considered to be charged directly to such foreign investor while a management fee that is paid to a US adviser for managing a foreign investor’s separate account will be considered to be charged directly to such foreign investor. 
 

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