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ILPA Releases Quarterly Reporting Templates

The Institutional Limited Partners Association has released its latest set of standardized reporting templates as part of its ongoing campaign to promote best practices between limited partners and general partners.

The latest set of templates focus on quarterly management reporting requirements and incorporate comments from ILPA members, private equity firm executives and from private equity industry service providers. The core contents of ILPA’s quarterly reporting package—which is meant to be indicative of the minimum amount of disclosures LPs expect of their GPs—include a summary management discussion and analysis letter, followed by the “financial package.” The latter would include the firm’s balance sheet, and a statement on its cash flows and operations, among other information. ILPA also requests “supplemental management reports,” which include an executive summary, a supplemental schedule of investments and an update on each portfolio company.

The association recommends that LPs should receive the report within 60 days of a quarter’s end, though it suggests GPs should target delivering them within 45 days of a quarter’s end. It gives funds of funds more time to aggregate underlying funds data, and suggests they should deliver the report within 90 days, though target delivery within 75 days.

The first set of templates was released in January. The fundamental goal is to make reporting practices more efficient and increase transparency. More than 230 organizations have endorsed ILPA’s private equity principles, while more than 100 general partnerships have helped develop the templates, according to ILPA.

Volcker Rule Draft Draws Scrutiny

Federal regulators have released a draft of the Volcker Rule, drawing heavy criticism from financial industry groups, industry watchdogs, politicians and even the rule’s namesake, in part because of its complexity. The draft of the rule, which took up 10 pages when it originally went to Congress, was nearly 300 pages, not including more 1,300 questions about 400 topics. “I don’t like it, but there it is,” former Federal Reserve Chairman Paul Volcker told The New York Times.

Meanwhile, one federal agency, the Commodity Futures Trading Commission, reportedly was concerned because an earlier draft of the rule didn’t adequately address its costs and benefits, which could expose regulators to legal challenges. (In July, a federal appeals court rejected an SEC rule that would have made it easier for shareholders to fire company directors and install their own candidates for board of directors because, it said, the agency had not conducted a thorough enough analysis of the rule’s economic impact.) Sister news service Reuters, however, reported on Oct. 14 that the CFTC was expected to stay consistent with other regulators in its interpretation of the rule.

NYSE Euronext Opposes Tax Change On Partnership Sales

The NYSE Euronext distributed an Oct. 20 letter it sent to congressional leaders announcing its opposition to a provision in President Barack Obama’s American Jobs Act that would tax profits on the sale of an investment management partnership at ordinary income rates. Such tax treatment, the securities exchange said, would make investment partnerships “the only businesses in the U.S. that would be ineligible for long-term capital gains treatment.” It would also “directly impact members of our community that are structured as investment partnerships” and “could also affect hundreds of thousands of small firms that invest in America’s small and mid-sized companies and real estate projects.”

President Obama failed to get a vote on the act, though his administration is now trying to pass parts of it as individual pieces of legislation.