The Securities and Exchange Commission has proposed a number of new rules and rule amendments (the Proposed Implementing Rules) to implement provisions of Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or the Act), which made significant changes to the Investment Advisers Act of 1940, as amended.

Title IV of Dodd-Frank, the Private Fund Investment Advisers Registration Act, was intended to require many managers of hedge funds and private equity funds to register with the SEC. Effective July 21, 2011, Dodd-Frank repeals the exemption from registration in Section 203(b)(3) of the Advisers Act for investment advisers who (i) have had fewer than 15 clients in the preceding 12 months; (ii) do not generally hold themselves out to the public as investment advisers; and (iii) do not act as advisers to registered investment companies or business development companies. Although it repealed Section 203(b)(3), Congress expressly directed the SEC to promulgate rules exempting, among others, advisers managing only private funds with less than $150 million in assets under management (AUM) in the United States, foreign private advisers and venture capital fund advisers. These exemptions (the Proposed Exemptive Rules) were proposed in a companion release and are addressed in a separate advisory.