Investment Advisers Regulation - Comment Letters

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Gavel.png FINAL RULE: This page refers to the proposed rulemakings on registration and reporting by investment advisers. The SEC final rule was issued at its June 22, 2011 open meeting.
Dodd-Frank Timeline, Investment Adviser Performance Compensation, SEC
Proposal Date Final Rule Issue Effective Date
May 13, 2011 February 22, 2012 May 22, 2012
Dodd-Frank Timeline, Rules Implementing Amendments to the Investment Advisers Act of 1940, SEC
Final Rule Issue Effective Date Compliance Date
July 19, 2011 September 19, 2011 March 30, 2012
Dodd-Frank Timeline, Adviser Exemptions, SEC
Comment Deadline Final Rule Issue Effective Date
January 24, 2011 July 6, 2011 July 21, 2011

Comment Letters addressing Investment Advisers Regulation. The letters are grouped according to the rule proposal being addressed.

Rules Implementing Amendments to the Investment Advisers Act of 1940

At its November 19, 2010 meeting, the U.S. Securities and Exchange Commission (SEC) proposed rules implementing amendments to the Investment Advisers Act of 1940, which clarify and define registration and reporting requirements for investment advisers.[1]

Summary of the proposal:

  • Registration of advisers to hedge funds and other private funds with the SEC. Title IV of the Dodd-Frank Act would eliminate a registration exemption for private advisers with fewer than 15 clients.
  • Dodd-Frank Act's mandate to require reporting by certain advisers that are exempt from SEC registration.
  • The asset threshold for advisers to register with the SEC. The Dodd-Frank Act creates a new category of advisers called "mid-sized advisers." In doing so, the Commission raises the registration threshold to $100 million. A mid-sized adviser would typically be exempt from Commission registration.
  • The definition of "venture capital fund," as well as clarification regarding certain exemptions to investment adviser registration.
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Exemptions for Advisers to Venture Capital Funds, Private Fund Advisers With Less Than $150 Million in Assets Under Management, and Foreign Private Advisers

At its November 19, 2010 meeting, the U.S. Securities and Exchange Commission (SEC) proposed rules that clarify and define "venture capital fund," "private fund adviser" (with less than $150 million in assets under management in the U.S.) and "foreign private advisers," including registration exemptions for all three.[2]

Summary of the proposal:

  • "A venture capital fund is a private fund that--
  1. represents itself to investors as being a venture capital fund;
  2. only invests in equity securities of private operating companies to provide primarily operating or business expansion capital (not to buy out other investors), U.S. Treasury securities with a remaining maturity of 60 days or less, or cash;
  3. is not leveraged and its portfolio companies may not borrow in connection with the fund's investment;
  4. offers to provide a significant degree of managerial assistance, or controls its portfolio companies; and
  5. does not offer redemption rights to its investors."
  • The exemption for private fund advisers with less than $150 million in assets is available depending on whether the adviser is a U.S. or foreign adviser and the fund is managed in the U.S.
  • A registration exemption is proposed for "foreign advisers that do not have a place of business in the United States, and have less than $25 million in aggregate assets under management from U.S. clients and private fund investors and fewer than 15 U.S. clients and private fund investors."
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References

  1. SEC Proposes Rules to Improve Oversight of Investment Advisers. SEC. Retrieved on November 19, 2010.
  2. SEC Proposes Rules to Improve Oversight of Investment Advisers. SEC. Retrieved on November 19, 2011.

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