Effective July 21, 2011, Advisers to Hedge Funds and Private Equity Funds Face Registration

Under Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act, effective July 21, 2011, changes to the registration and reporting and recordkeeping requirements of the Investment Advisers Act of 1940 require advisers to private funds (hedge funds and private equity funds) to register with the SEC.  In the past, many of these advisers relied on the so-called “private adviser” exemption to avoid registration. Under Section 403 of the Dodd-Frank Act, now some of these same advisers that exclusively advise venture capital funds and private fund advisers with less than $150 million in assets under management in the United States, face narrower exemptions for adviser registration.  However, foreign private advisers and advisers to licensed small business investment companies are exempted.

Under the Dodd-Frank Act, the SEC will also have the authority to collect data from investment advisers about their private funds for the purposes of the assessment of systemic risk by the Financial Stability Oversight Council.  Finally, the Dodd-Frank Act modifies the allocation of regulatory responsibility for mid-sized advisers between state regulators and the SEC. here.