On Wednesday, June 22 the SEC approved two sets of rules to implement amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act. One set of rules requires advisers to hedge funds and other private funds to register with the SEC, establishes new exemptions from SEC registration and reporting requirements for certain advisers and transfers regulatory responsibility for certain advisers between the SEC to the state level. The other rule defines “family offices” that are to be excluded from the Investment Advisers Act.
The rules implementing the amendments to the Investment Advisers Act include a transitional exemption period so that private advisers, including hedge fund and private equity fund advisers, newly required to register do not have to do so until March 30, 2012. The rules regarding exemptions for venture capital fund and certain private fund advisers are effective July 21, 2011. Family offices that do not meet the terms of the exclusion under the new rule must register with the SEC or applicable state securities authorities by March 30, 2012.
During the public comment period, the SEC received 70 comment letters on their proposed rules. Note at this post writing I will address on the definition of the “Mid-Sized Advisor”. Over the next few posts I will abstract the remainder of the rule changes.
The Mid-sized Advisor
The SEC added a new category for the advisor called “Mid-Sized Advisers”. In effect, the Mid-sized advisor would be considered those funds with assets under management of between, $25 million to $100 million. These Mid- Sized Advisors would no longer register with the Commission but instead be under the auspice of state regulators. Those who already registered with the SEC will have to withdraw their registration. The only exemption from state registration (therefore still be under SEC) is where a state would not perform an examination of the Funds.
Note: advisers with their principal office and place of business in Minnesota, New York and Wyoming with between $25 million and $100 million in AUM won’t have to switch to state regulation and instead must register with the SEC. New York did not provide confirmation that it conducts exams of advisory firms when surveyed by the SEC; Minnesota reported it doesn’t conduct exams; and Wyoming doesn’t have an investment adviser law.
The SEC stated that this amendment will force about 3,200 of the current 11,500 registered advisers to switch from registration with the SEC to registration with the states.
I am attaching a link to the 238 page report on the amendments to Dodd Frank http://www.sec.gov/rules/final/2011/ia-3221.pdf
and the 52 page report on
on the definition of a “Family Office”
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