North American Securities Administrators Association revises proposed model rule addressing state registration of exempt private fund managers.

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As most people involved in the investment management industry know, many private investment fund managers will soon be required to register as investment advisers with the SEC, unless they meet certain exemptions, such as the so-called "private fund adviser exemption," which exempts private fund managers who manage under $150 million in assets or the "venture capital exemption," which exempts fund managers who solely manage venture capital funds. As I have previously written, even when a fund manager qualifies for one of these exemptions, it may still be required to file an abbreviated Form ADV with the SEC as a "exempt reporting adviser." In addition, since many fund managers had previously relied on exemptions from state registration which were conditioned on a fund manager qualifying for the federal 15-client exemption, which was repealed by the Dodd-Frank Act, they may also be required to register with their state securities commissioner. Furthermore, we can expect that some of those states which currently have exemptions for private funds which are unchanged from the repeal of the 15-client exemption may begin to modify their laws to require more private fund managers to register with the state securities administrator. Along these lines, the North American Securities Administrators Association (NASAA) recently published a model rule which complements the federal rules and addresses when an fund manager exempt from federal registration is also exempt from state registration.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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