Proposed Rules Under the Investment Advisers Act: SEC Proposes Rules to Implement Dodd-Frank Act Registration Requirements for Advisers to Private Funds; Registration Exemptions for Venture Capital Funds, Certain Private Fund Advisers and Foreign Private Advisers; and Reporting Requirements for Registered Advisers and Certain Exempted Advisers

Sullivan & Cromwell LLP - November 24, 2010

The SEC has proposed rules to implement certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding investment advisers to private funds, such as hedge funds and private equity funds. The proposals would:

  • establish reporting requirements for private fund advisers that will be required by the Dodd-Frank Act to register under the Investment Advisers Act of 1940 and more limited reporting requirements for certain private fund advisers that will continue to be exempted from registration under the Advisers Act;
  • increase the scope of disclosure required of all registered investment advisers on Form ADV;
  • clarify the exemptions from Advisers Act registration available to advisers to venture capital funds and private funds with less than $150 million in assets under management in the United States, and foreign private advisers; and
  • clarify the parameters of the prohibition from SEC registration applicable to “mid-sized” investment advisers with between $25 million and $100 million in assets under management.

The SEC requests comments on these proposals within 45 days after their publication in the Federal Register, which we expect to occur shortly. For further background on the Dodd-Frank Act provisions that the SEC’s proposed rules would implement, please see our memorandum entitled “Implications of Financial Services Reform for Hedge Funds and Private Equity Funds.