SEC Adopts Rules Implementing Private Fund Manager Registration

The SEC adopted rules today implementing the investment adviser registration requirements imposed by the Dodd Frank Wall Street Reform and Consumer Protection Act (the “Dodd Frank Act”). As expected, the SEC delayed the registration requirement for hedge fund managers and private equity fund managers until March 30, 2012.

The SEC passed rules today:

• amending Form ADV Part 1 to require more information to be provided to the SEC;
• adopting new reporting requirements on Form ADV Part 1 for “exempt reporting advisers” (i.e., investment advisers that solely advise venture capital funds and investment advisers that solely advise private funds and have less than $150 million in assets under management in the U.S.);
• implementing the reallocation of regulatory responsibility from the SEC to the states for investment advisers with assets under management of between $25 million and $100 million, including by delaying the required switch from SEC to state registration until June 2012;
• making certain amendments to the SEC “Pay to Play” rule, including by extending the compliance requirements with respect to payments to broker-dealers acting as third party marketers until June 2012;
• adopting a definition of “venture capital fund” for purposes of the exemption provided by the Dodd Frank Act to investment advisers that solely advise venture capital funds;
• adopting an exemption for investment advisers that solely manage private funds and that have less than $150 million in assets under management in the U.S.;
• defining terms for purposes of the foreign private adviser exemption provided by the Dodd Frank Act; and
• adopting an exemption from investment adviser registration for investment advisers to family offices.

We will provide further updates to our clients and other friends as soon as the details of these rules are released by the SEC.