On November 19, 2010, the SEC proposed new rules and rule amendments under the Advisers Act to implement certain provisions of the Dodd-Frank Act. Specifically, the SEC’s proposed rules and rule amendments would:

  • facilitate the de-registration and registration of so-called “mid-sized advisers”—investment advisers with assets under management between $25 million and $100 million,
  • require advisers to provide additional information about certain areas of their operations on Form ADV, including information about the private funds they manage and information about use of affiliated brokers, soft dollar arrangements and compensation for client referrals,
  • require “exempt reporting advisers” (venture capital fund advisers, private fund advisers and foreign private advisers, which qualify for an exemption from registration under the Advisers Act but may be subject to certain reporting requirements) to complete certain portions of Form ADV, which would be filed through the IARD system and made available to the public,
  • amend Rule 206(4)-5 under the Advisers Act (the “pay to play” rule) to expand its application to exempt reporting advisers and allow an adviser to pay a “regulated municipal advisor” to solicit business on behalf of the adviser from a state or local government entity,
  • define a “venture capital fund” for purposes of the exemption from registration under the Advisers Act for advisers that exclusively advise venture capital funds,
  • clarify which private fund assets an adviser must count towards the $150 million limit for purposes of the exemption from registration under the Advisers Act for advisers acting solely as investment adviser to one or more qualifying private funds with aggregate assets totaling no more than $150 million in the United States, and
  • provide interpretive guidance as to many of the terms used in the Dodd- Frank Act within the definition of “foreign private adviser” for purposes of the exemption from registration under the Advisers Act for foreign private advisers.

Comments on the proposals are due within 45 days of publication in the Federal Register.