Private Fund Custody

Private Fund Custody

According to the SEC, Registered Investment Advisors who have custody of their clients’ funds or securities must safeguard those funds as required by the Custody Rule. To comply with the Custody Rule, private fund issuers may use an independent qualified custodian to hold client assets. Midland Trust Company is qualified custodian that offers this service to private funds and organizations to add an intrinsic value of transparency and separation per the requirements of the Custody Rule.

Midland Trust Company provides the following ongoing custodial services:

Full custody

  • Custody of assets and cash
  • Register all assets in Midland’s name
  • Processing all new purchases/liquidations
  • Monitors all incoming and outgoing payments
  • Provide fund-level statements to all investors of the Fund

Document Custody

  • Physical custody of original documents (i.e. stock certificate)
  • No re-registration of assets
  • No cash custody or payment processing
  • Essentially a “safety deposit box”

There are many benefits of custody examination vs financial statement audit. Midland Trust Company opens accounts at Fund level to hold cash and alternative investments such as private equity/debt, VC, and real estate. We process transactions in and out of the fund and report all holdings and activity to the Fund and its participants on a quarterly basis. Midland Trust Company provides a customizable solution and pricing plan based on each Fund’s structure and needs. Our firm understands the requirements of the Custody Rule and will be responsive partners to surprise examiners and fund administrators.

Since Midland does not endorse investments, give tax, investment, or legal advice, we will never compete with you for your clients’ business and will act as a third party to your clients and their investment choices. At Midland, your relationship is important to us and you’ll be assigned a dedicated account manager who will directly work with you to provide the utmost service.

Contact Midland Trust Company today and a member of our business development staff will discuss your fund-level custody needs. You may also call us at (312) 767-6863.

Operating Your Private Fund Infographic

Frequently Asked Questions

The Custodian operates at the fund-level, while the Administrator operates at an investor-level. Think of the Qualified Custodian as the home base for the cash and assets of the fund. It is where all of the transactions take place and are reported, such as the fund’s incoming subscriptions, investments, distributions, and more, whereas the Fund Administrator is responsible for collecting information and performance reporting for each respective individual investor.

Midland has developed Midland Dash, a dashboard that allows the fund manager to upload investment documents, initiate an investment, pay expenses, and execute transactions that the fund needs. Midland Dash is designed to let fund managers manage their private fund(s) as quickly and efficiently as possible. Statements and historical transaction reports can be retrieved for auditors or investors at any time.

For funds to adhere to the custody rule, Midland sends reports quarterly. Formal, fund-level statements are furnished for the fund and its investors and can be delivered to most of the investors’ roster for a given quarter. In the statement made available to the fund manager, sensitive information, such as the investor’s name on contributions, is redacted.

Custody Services provided by Midland can be tailored to your business’ operational, administrative, and compliance needs. Whether you need to check a box for your examiners, completely outsource your “back-office” or want to deliver more value to your investors by providing transparency – Midland’s Private Fund Custody solutions can be customized to fit your needs. There is no “one-size-fits-all” approach here. Reach out to start a conversation with us, and we can present you with a solution that keeps your costs low and your fund compliant.