The SEC has adopted rules that require advisers to hedge funds and other private funds to register with the SEC, establish new exemptions from SEC registration and reporting requirements for certain advisers, and reallocate regulatory responsibility for advisers between the SEC and states.

Registration Deadline for Private Equity Funds and Hedge Funds

Advisers to private funds have been able to avoid registering with the SEC because of an exemption that applies to advisers with fewer than 15 clients – an exemption that counted each fund as a client, as opposed to each investor in a fund.  Title IV of the Dodd-Frank Act eliminated this private adviser exemption.  Consequently, many previously unregistered advisers, particularly those to hedge funds and private equity funds, will have to register with the SEC and be subject to its regulatory oversight, rules and examination.

These advisers will be subject to the same registration requirements, regulatory oversight, and other requirements that apply to other SEC-registered investment advisers. To provide these advisers with a window to meet their new obligations, the transition provisions the SEC is adopting today will require these advisers to be registered with the SEC by March 30, 2012.

Private Fund Advisers With Less Than $150 Million in Assets Under Management in U.S.

The SEC also adopted a rule that would implement the new statutory exemption for private fund advisers with less than $150 million in assets under management in the United States. The rule largely tracks the provision of the statute.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.