The SEC’s final rules on the implementation of SEC registration requirements for investment advisers under the Investment Advisers Act of 1940, as recently modified by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), were published in the Federal Register and will become effective July 21, 2011 (the “Rules”). The Rules define who will be exempt from SEC registration in terms of the venture capital exemption and the exemption for private funds with less than $150 million in assets under management.

SBIC Exemption

Advisers whose sole clients are one or more Small Business Investment Companies (“SBICs”), regardless of the amount of their assets under management, are exempt from SEC registration as mandated by the Dodd-Frank Act. Although the SBIC exemption was not captured under the Rules (the exemption is directly stated in the Dodd-Frank Act), the SEC’s release accompanying the Rules provides guidance that is relevant to the application of the SBIC exemption.