Evaluation of DPPs
Chapters in this video
- 0:00 Economic soundness test: no tax benefit justification
- 1:12 Due diligence factors and documentation requirements
- 2:37 Liquidity disclosures and discretionary prior written approval
- 3:48 Compensation caps: 15% expenses versus 10% underwriting
- 5:37 Roll-up structure and 2% solicitation compensation
- 6:58 75% approval threshold versus 66 and two thirds percent exemption
- 8:06 Rapid-fire exam recap
What this video covers
- What the economic soundness test requires and why tax benefits alone never justify a DPP recommendation
- The full due diligence checklist for evaluating a general partner (GP), program objectives, start-up costs, leverage, and revenue projections
- Why discretionary DPP trades require prior written approval even when standard account discretion already exists
- The required disclosure of a sponsor's history of missing previously disclosed liquidation target dates
- The 15% organization and offering expenses cap versus the 10% total underwriting compensation cap, and why mixing them up is a fatal exam error
- Why compensation paid before escrow release is strictly prohibited
- The 2% solicitation compensation cap for limited partnership roll-ups, the equal-compensation voting rule, the 75% approval threshold, and the distinct 66 and two thirds percent general partner succession exemption
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