At an open meeting on June 22, the SEC voted to adopt rules
substantially as proposed earlier this year that:
implement provisions of Title IV of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank), by requiring
certain advisers to hedge funds and other private funds to register
with the SEC;
establish new exemptions from investment adviser registration
and reporting requirements for certain advisers; and
reallocate regulatory responsibility for advisers between the
SEC and the states.
The deadline for advisers to come into compliance with the
rules is March 30, 2012. By that date:
advisers with more than $100 million in assets under management
($150 million for advisers solely to private funds) must register
and comply with the obligations of a registered investment adviser;
mid-sized advisers generally must transition from SEC to state
registration, provided such advisers would be subject to state
registration and examination.
Mid-sized advisers that maintain their principal office in the
states of Minnesota and New York will remain subject to SEC
registration as those states do not subject advisers to
examination. Advisers that maintain their principal office in
Wyoming will also remain subject to SEC registration as Wyoming
does not regulate investment advisers.
Advisers solely to venture capital funds and private funds with
less than $150 million in assets under management in the United
States (Exempt Reporting Advisers) will be subject to certain
reporting requirements, which will require less than the full
panoply of information required of SEC registered advisers. The SEC
does not intend to conduct routine examinations of Exempt Reporting
Advisers, but will have the ability to do so if the circumstances
A venture capital fund as defined by the SEC may invest in a
"basket" of non-qualifying investments of up to 20% of
its committed capital; an adviser to such a venture capital fund
would still qualify for an exemption from registration.
The SEC reaffirmed the validity of the Unibanco line
of no-action letters; thus, a non-U.S. adviser affiliated with an
SEC registered adviser will not be required to register with the
SEC if it follows the guidance provided by the SEC staff in those
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