Registration Delayed for Private Fund Advisers; New Registration, Reporting, and Disclosure Requirements Adopted

On June 22, 2011, the SEC adopted final rules requiring advisers to private funds to register with the SEC and confirmed rumors of an extension of the new registration date required for previously unregistered private fund advisers, which is now set for March 30, 2012. In addition, advisers who are currently registered with the SEC but will no longer be eligible for SEC registration based on assets under management below $100 million will have until June 28, 2012 to switch to state registration.

Furthermore, although the SEC adopted several new exemptions from SEC registration (including exemptions for venture capital fund advisers, private fund advisers with less than $150 million in assets under management, and certain foreign private advisers), the implementing release significantly expanded the reporting and disclosure obligations for all advisers to private funds, including exempt advisers. In dissenting from the adoption of these enhanced reporting obligations, SEC Commissioners Troy Paredes and Kathleen Casey, provided insightful comments on the potential impact of these requirements. Mr. Paredes stated in his speech at the open meeting that “exempt advisers will find themselves subject to what in substance is registration.” Ms. Casey echoed these objections in her statement, in which she expressed concern over the “lack of any principled, meaningful distinction drawn in the release between exempt advisers and registered advisers.”

For additional information on the new rules and the significant impact they will have on the industry, please contact Zac Rosenberg, Compliance Consultant by email at zachary.rosenberg@corecls.com or by phone at (619) 278-0020.