SEC Announces Upcoming Plans to Implement New Registration, Reporting, and Recordkeeping Requirements for Investment Advisers

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) includes significant changes to the registration and reporting requirements under the Investment Advisers Act of 1940 (the “Advisers Act”), including requiring many advisers to private funds to register with the SEC or the states and increasing the threshold for federal registration from $25 million to $100 million in assets under management. Although many of these amendments will not take effect until July 21, 2011 (one year from the date of enactment), the Dodd-Frank Act requires the SEC to adopt rules to implement its provisions before they take effect.

In accordance with these mandates, the SEC has recently announced its upcoming plans for certain rulemaking and other activities to occur over the next several months, including proposals for implementing the Dodd-Frank Act’s provisions pertaining to the regulations and oversight of investment advisers. Specifically, between October and December of this year, the SEC plans to take the following actions and proposals:

  1. Revisions to forms and other guidance as necessary to implement the transition of advisers with assets under management between $25 and $100 million from SEC to state registration, as required by the Dodd-Frank Act;
  2. Rules further revising the “accredited investor” standard applicable to exempt offerings of securities;
  3. Definitions of “venture capital fund” and “family office” for the purposes of implementing various exemptions from registration as an investment adviser;
  4. Amendments to the threshold for “qualified client” (presumably to coincide with the amendments to the definition of “accredited investor” provided by the Dodd-Frank Act); and
  5. Regulations regarding the implementation of the reporting obligations for investment advisers for the purposes of the assessment of systemic risk.

This will certainly make for a busy fourth quarter for the SEC, and as the various proposals are released, Core Compliance will provide updates and practical guidance regarding the compliance implications of the new and amended rules. For more information, contact us at (619) 278-0020 to schedule your consultation.

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