Issued by FDIC
Sec. 225.180 Definitions.
For purposes of this subpart:
(a) Banking entity means –
(1) Any insured depository institution;
(2) Any company that controls an insured depository institution;
(3) Any company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978; and
(4) Any affiliate or subsidiary of any of the foregoing entities.
(b) Hedge fund and private equity fund mean an issuer that would be an investment company, as defined in the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), but for section 3(c)(1) or 3(c)(7) of that Act, or such similar funds as the appropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission may, by rule, as provided in section 13(b)(2) of the Bank Holding Company Act (12 U.S.C. 1851(b)(2)), determine.
(c) Insured depository institution has the same meaning as given that term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), except that for purposes of this subpart the term shall not include an institution that functions solely in a trust or fiduciary capacity if—
(1) All or substantially all of the deposits of such institution are in trust funds and are received in a bona fide fiduciary capacity;
(2) No deposits of such institution which are insured by the Federal Deposit Insurance Corporation are offered or marketed by or through an affiliate of such institution;
(3) Such institution does not accept demand deposits or deposits that the depositor may withdraw by check or similar means for payment to third parties or others or make commercial loans; and
(4) Such institution does not—
(i) Obtain payment or payment related services from any Federal Reserve bank, including any service referred to in section 11A of the Federal Reserve Act (12 U.S.C. 248a); or
(ii) Exercise discount or borrowing privileges pursuant to section 19(b)(7) of the Federal Reserve Act (12 U.S.C. 416(b)(7)).
(d) Nonbank financial company supervised by the Board means a nonbank financial company supervised by the Board of Governors, as defined in section 102 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (12 U.S.C. 5311).
(e) Board means the Board of Governors of the Federal Reserve System.
(f) Illiquid fund means a hedge fund or private equity fund that:
(1) As of May 1, 2010—
(i) Was principally invested in illiquid assets; or
(ii) Was invested in, and contractually committed to principally invest in, illiquid assets; and
(2) Makes all investments pursuant to, and consistent with, an investment strategy to principally invest in illiquid assets.
(g) Illiquid assets means any real property, security, obligation, or other asset that–
(1) Is not a liquid asset;
(2) Because of statutory or regulatory restrictions applicable to the hedge fund, private equity fund or asset, cannot be offered, sold, or otherwise transferred by the hedge fund or private equity fund to a person that is unaffiliated with the relevant banking entity; or
(3) Because of contractual restrictions applicable to the hedge fund, private equity fund or asset, cannot be offered, sold, or otherwise transferred by the hedge fund or private equity fund for a period of 3 years or more to a person that is unaffiliated with the relevant banking entity.
(h) Liquid asset means:
(1) Cash or cash equivalents;
(2) An asset that is traded on a recognized, established exchange, trading facility or other market on which there exist independent, bona fide offers to buy and sell so that a price reasonably related to the last sales price or current bona fide competitive bid and offer quotations can be determined for the particular asset almost instantaneously;
(3) An asset for which there are bona fide, competitive bid and offer quotations in a recognized inter-dealer quotation system or similar system or for which multiple dealers furnish bona fide, competitive bid and offer quotations to other brokers and dealers on request;
(4) An asset the price of which is quoted routinely in a widely disseminated publication that is readily available to the general public or through an electronic service that provides indicative data from real-time financial networks;
(5) An asset with an initial term of one year or less and the payments on which at maturity may be settled, closed-out, or paid in cash or one or more other liquid assets described in paragraphs (h)(1), (2), (3), or (4); and
(6) Any other asset that the Board determines, based on all the facts and circumstances, is a liquid asset.
(i) Principally invested and related definitions.—A hedge fund or private equity fund:
(1) Is principally invested in illiquid assets if at least 75 percent of the fund’s consolidated total assets are—
(i) Illiquid assets; or
(ii) Risk-mitigating hedges entered into in connection with and related to individual or aggregated positions in, or holdings of, illiquid assets;
(2) Is contractually committed to principally invest in illiquid assets if the fund’s organizational documents, other documents that constitute a contractual obligation of the fund, or written representations contained in the fund’s offering materials distributed to potential investors provide for the fund to be principally invested in assets described in paragraph (i)(1) at all times other than during temporary periods, such as the period prior to the initial receipt of capital contributions from investors or the period during which the fund’s investments are being liquidated and capital and profits are being returned to investors; and
(3) Has an investment strategy to principally invest in illiquid assets if the fund—
(i) Markets or holds itself out to investors as intending to principally invest in assets described in paragraph (i)(1) of this section; or
(ii) Has a documented investment policy of principally investing in assets described in paragraph (i)(1) of this section.