On June 22, 2011, the Securities and Exchange Commission ("SEC") adopted final rules under the Private Fund Investment Advisers Registration Act of 2010 (the “Act”), contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) relating to the registration of investment advisers under the Investment Advisers Act of 1940 ("Advisers Act"). Specifically, the final rules (i) clarify the exemptions from investment adviser registration embodied in the Act (ii) establish a uniform method for calculating assets under management, (iii) reallocate regulatory responsibility for investment advisers between the SEC and states, and (iv) amend Form ADV to reflect new rules and regulations.
Advisers will not need to be in compliance with these new rules until March 30, 20121 but it is important to review how the Act alters the landscape of advisers subject to registration with the SEC. On the one hand, the Act broadens the scope of SEC regulation by eliminating what historically has been the primary exemption relied upon hedge funds, private equity funds and others, namely the “private adviser exemption.”Registration Thresholds On the other hand, the Act effectively raises the threshold for SEC registration from $25 million in assets under management to $100 million, precluding smaller advisers from registering and requires others to withdraw their registration.
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