The Private Fund Investment Advisers Registration Act of 2010 (Act), passed by the U.S. Senate on May 20, would require hedge fund managers with assets under management of $100 million or more to register as investment advisers with the Securities and Exchange Commission (SEC). The Act contains exemptions from registration for “family offices” and for advisers to “private equity funds” and “venture capital funds,” leaving all such terms to be defined by the SEC. The Act imposes the registration requirement by eliminating the so-called “small advisers” (or “private advisers”) exemption currently available to advisers with fewer than 15 clients in the preceding 12 months who did not hold themselves out to the public as investment advisers. By repealing this exemption, the Act would subject all such advisers, and not just hedge fund managers, to registration with either the SEC or potentially a state or multiple states (depending upon applicable state exemptions). By raising the current $25 million threshold for SEC registration to $100 million, another effect of the Act would be to cause SEC-registered U.S. investment advisers with assets under management between these two levels to have to de-register and become regulated by the states.....

...This Advisory focuses on the important changes that the Act would make to the Investment Advisers Act of 1940 (Advisers Act).