SEC Final Rule: Rules Implementing Amendments to the Investment Advisers Act of 1940

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Gavel.png FINAL RULE: Implementing Amendments to the Investment Advisers Act - Hedge Fund Registration approved at SEC Open Meeting, June 22, 2011
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

On June 22, 2011, the SEC finalized rules concerning amendments to the Investment Advisers Act of 1940 to implement provisions of the Dodd-Frank Act. Among the topics at this meeting were the provisions of Title IV of the Dodd-Frank Act, the statutory threshold for registration by investment advisers with the Commission, hedge fund adviser and private fund adviser registration with the Commission, registration exemptions for reporting by certain investment advisers and regulatory responsibility of the states and the SEC concerning advisers.[1] Rules will be added to the Federal Register following the open meeting.

Final Rules

  • Advisers to private fund must provide to the SEC:
  1. "basic organizational and operational information about each fund they manage, such as the type of private fund that it is (e.g., hedge fund, private equity fund, or liquidity fund), general information about the size and ownership of the fund, general fund data, and the adviser's services to the fund; and
  2. identification of five categories of 'gatekeepers' that perform critical roles for advisers and the private funds they manage (i.e., auditors, prime brokers, custodians, administrators and marketers)."
  • Under Dodd-Frank, exemptions exist for:
  1. "advisers solely to venture capital funds;
  2. advisers solely to private funds with less than $150 million in assets under management in the U.S.; and
  3. certain foreign advisers without a place of business in the U.S."

Exempt advisers will still be required to file a limited set of information with the SEC.

  • The SEC raised its Commission registration threshold to $100 million and created a new category of advisers called "mid-sized advisers." Advisers who were formerly required to register with the SEC and are now subject to state regulation have until June 28, 2012 to complete the registration transition.
  • Advisers registered with the SEC will be allowed to hire registered municipal advisers for government investment activities, as long as the FINRA and/or MSRB pay-to-play rules are at least as stringent as the investment adviser pay-to-play rule.
  • The SEC created new exemptions for:
  1. "advisers solely to venture capital funds;
  2. advisers solely to private funds with less than $150 million in assets under management in the United States; and
  3. certain foreign advisers without a place of business in the United States."

References

  1. SEC Adopts Dodd-Frank Act Amendments to Investment Advisers Act. SEC. Retrieved on June 22, 2011.

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