Private Fund Custody

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

Benefits of Custody Service With Midland

Expand Your Investment Options

Midland is a premiere qualified custodian, focusing on providing clients with as many opportunities to invest as possible. At Midland, investments can be made in both traditional and alternative assets.

Responsive, Personalized Service

Our firm understands the Custody Rule requirements and will be responsive partners to surprise examiners and fund administrators.

Whether you are operating an established fund with a significant number of assets under management or launching a new fund and planning to raise capital, Midland can help. Midland helps you meet custody requirements and investor demand for transparency.

At Midland, your relationship is important to us. You’ll be assigned a dedicated account manager who will directly work with you to provide the utmost service.

24/7 Access

Your clients can diversify their holdings through their Midland Dash online portal. With the portal, they can also transfer money, gain access to account reports, and more!

Through Midland Dash, your clients can authorize you to track their account opening and funding, as well as give you access to their current holdings and account activity.

Midland Trust Company Provides the Following Ongoing Private Fund Custody 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”

Benefits of Custody Examination VS Financial Statement Audits

There are many benefits of custody examination vs. financial statement audits. Midland opens accounts at the fund level to hold cash and alternative investments. These alternative investments include private equity/debt, VC, and real estate. We process transactions for the fund and report all holdings and activity to the fund and its participants quarterly. Midland provides a customizable solution and pricing plan based on each fund’s structure and needs. We understand the Custody Rule requirements and are responsive partners to surprise examiners and fund administrators.

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

Contact Midland Trust 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.

Legal

Fulfills any legal documentation or regular registrations.

Forms private fund and entities

Registers Investment Advisor

Files ADV form

Fund Administrator

Performs reports for investors and reviews investor onboarding.

Produces NAV

Reconciles portfolio

Performs accounting for portfolio

Furnishes investor statements

Auditor

PCAOB-registered firm to administer surprise exam or full, annual audit.

Generates tax filing documents for manager and investors

Audits financials

Conducts surprise exam

Completes K-1s for investor

Prime Broker

Transacts in public markets (NYSE and Nasdaq).

Executes trades on public exchanges

Manages portfolio margins

Outsources trading

Qualified Custodian

Provides transparency and fulfills Custody Rule requirement.

Furnishes fund-level statements to the fund & investors

Executes transactions on behalf of the fund

Manages cash

Manages and stores investment documents

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 the transactions take place and are reported. These transactions can include 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 a custom dashboard for fund managers called Midland Dash. It allows the manager to upload investment documents, initiate an investment, pay expenses, and execute the fund’s transactions. Midland Dash is designed to let fund managers manage their private fund(s) quickly and efficiently. Auditors and investors can retrieve statements and historical transaction reports 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. These statements 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.