The Securities and Exchange Commission (the “SEC”) recently proposed rules to implement changes to the Investment Advisers Act of 1940 (the “Advisers Act”) required by passage of the Dodd-Frank Wall Street Reform Consumer Protection Act (the “Dodd-Frank Act”).

If adopted in their current form, the proposed rules will significantly expand the universe of venture capital funds that may be required to register as investment advisers and increase the compliance and regulatory costs for those funds. In addition, venture capital funds and their management teams, who seek to comply with the new exemptions available under the Advisers Act, will be required to closely monitor their business activities to ensure that they do not run afoul of the new regulations.