Private fund advisers that have been exempt from registering with the SEC under the Investment Advisers Act of 1940 may not be required to comply with the registration and reporting requirements, recently proposed by the SEC in connection with Title IV of the Dodd-Frank Act, as soon as originally expected. The Associate Director of the SEC’s Division of Investment Management issued a letter on April 8, 2011, stating that he expects the SEC will offer additional time for private fund managers required register with, and/or report to, the SEC.

The Dodd-Frank Act eliminates the “private adviser exemption” commonly used by the private equity and venture capital industry, and replaces it with a new scheme of exemptions and exclusions. As a result, private fund managers have been expecting that they would be required to register with, and/or report to, the SEC for the first time by July 21, 2011.

The Associate Director expects the SEC to issue final rules governing the reporting and registration of private fund managers prior to July 21, but expects the SEC to provide additional time to such private fund managers to register and comply with the new rules. The expectation is that the SEC will consider extending the compliance deadline to the first quarter of 2012.

The extension would also likely apply to “mid-sized advisers” (certain managers having assets under management between $25 million and $100 million), who will be required to withdraw from registration with the SEC and comply with applicable state laws.

Private fund managers should consult with counsel as soon as possible to determine their obligations under the new regulatory framework. Final regulations are expected to be issued soon. Private fund managers should begin compliance efforts well in advance of the compliance date.