Summary

On June 22, 2011, the Securities and Exchange Commission (SEC) adopted new rules to implement Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Title IV increases the supervision of the previously unregulated hedge fund industry, while largely leaving the status quo in place for venture capital funds.1

After a grace period, these new rules will require hedge funds to register with the SEC. Once registered, hedge funds will have to comply with certain restrictions and reporting requirements.2

Venture capital funds will not have to register, but beginning on July 21, 2011, they will have to file reports with the SEC detailing basic identifying information, conflicts of interest, and disciplinary history, if any.

These new rules operate by simultaneously repealing and issuing a set of exemptions to the federal securities laws. Private funds, which include hedge funds, venture capital funds, private equity funds, and other types of pooled investment vehicles, have historically been exempt from the laws that regulate investment vehicles, which include the Investment Company Act (ICA) and the Investment Advisers Act of 1940 (IAA). Title IV repeals the old exemptions, but simultaneously reinstates narrower exemptions for venture capital funds and certain other private funds.