Last week, the Securities and Exchange Commission ("SEC") announced that it will hold an Open Meeting to discuss amending or adding rules under the Investment Advisers Act of 1940 (the "Advisers Act") to implement the registration provisions of Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"). The meeting will be held on June 22, 2011 at 10:00 am EST. Among the items to be discussed are whether additional or amended rules are needed to clarify the implementation of the registration provisions under Dodd-Frank, which, among other things, increase the statutory threshold for registration as an investment adviser with the SEC and require certain private fund advisers to register as investment advisers. In addition, the SEC will discuss whether new or amended rules are necessary to clarify the newly created exemptions from registration as an investment adviser enacted by Dodd-Frank. These exemptions provide relief for advisers to venture capital funds and advisers to private funds with less than $150 million of assets under management in the U.S.
Undoubtedly, the investment management industry will be watching the Open Meeting closely to see whether the SEC provides additional guidance on the above issues as well as a host of others concerns. For one, observers would like to hear, with certainty, that the SEC will delay the date that private fund advisers must register and come fully into compliance with the obligations applicable to them once they are registered until the first quarter of 2012. As enacted, the Dodd-Frank registration provisions take effect on July 21, 2011. In previous statements (see here and here), the SEC indicated that the compliance date for these provisions would be extended; however, no official guidance has been issued regarding this anticipated outcome. Private fund advisers, including private equity managers, are also looking for definitive guidance on whether private fund advisers must register as an investment adviser certain affiliated adviser entities to private funds (e.g., SPVs, general partners, and/or subadvisers), or merely register the primary adviser entity itself. Although the SEC has provided some guidance on this issue in the past, given that the Dodd-Frank registration provisions will require thousands of private fund advisers to register, the industry would welcome commentary from the SEC regarding the application of the registration provisions to affiliated entities.
As we approach the one-year anniversary of the passage of Dodd-Frank, many of the statutory provisions and associated rulemakings are set to take effect. We will monitor the Open Meeting and other key developments to keep you informed.