In June, the SEC adopted final rules as mandated by the Dodd-Frank Act to require many previously exempt advisers to private funds to become registered as investment advisers with the SEC. The final rules also establish new exemptions from the adviser registration rules.
Advisers relying on either of two exemptions—as advisers (1) to venture capital funds or (2) to private funds with less than $150 million in assets under management—will be considered “exempt reporting advisers.” Although not required to become registered with the SEC as advisers, or to come into compliance with all of the provisions of the Investment Advisers Act of 1940, exempt reporting advisers will nonetheless be required to submit regular reports to the SEC. Advisers relying on the exemption available to foreign private advisers (advisers who do not have a place of business in the United States and manage less than $25 million attributable to US investors, in addition to other requirements) will not be deemed “exempt reporting advisers” and will not be subject to registration or reporting requirements.
To assist exempt reporting advisers in navigating the new requirements, we suggest the practical considerations outlined in this regulatory brief.