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How important is it to go with a fund that has a formal opinion issued in connection with their Qualified Opportunity Fund?

What will the opinion tell me about the Qualified Opportunity Fund? Are opinions common practice?


Answers
  • Matthew Rappaport
    July 15, 2019

    An opinion is better than no opinion, but the opinion is not a requirement to have a qualifying investment. You do need some sort of verification that the fund is in fact a QOF, though, beyond the word of the sponsor.

  • Samuel Weiser
    July 08, 2019

    An opinion of counsel reduces risk to the investor related to compliance with the law and associated regulations, but generally, it is not necessary or customary for a fund to obtain such an opinion. Due diligence on the part of the investor should enable the investor to reach a conclusion whether the fund complies with the law.

  • Maria De Los Angeles Rivera
    July 03, 2019

    This is not required by the law or the regulations. It will depend on what the investors in the fund will require as part of their due-diligence work.

  • Erik Kodesch
    July 04, 2019

    An opinion is not necessary and probably cannot be relied on by investors. Still, better than nothing.

  • Guy Nicio
    July 02, 2019

    I'm not very familiar with formal opinions being issued in connection with a QOF, but it sounds like the result of a law firm doing due diligence on a fund an issuing a due-diligence opinion. As QOFs are brand new, I don't imagine there is much history on this topic. If I am understanding the assumption correctly, then the main issue in question is whether or not the investment is viable or safe, which is not my area of practice expertise. I am a tax CPA who can opine on the tax compliance, implications, etc. So you would have to elaborate further on who is issuing the opinion and what type of opinion is being issued (legal, tax, etc.). But if it's what I suspect and it's legal, then it's nothing more than due diligence. Having said that, due diligence is extremely important for any substantial investment. Otherwise, how does one know if there investment is in good (ethical) hands?