• House-Senate Conference Committee Approves Private Fund Investment Advisers Registration Act
  • July 15, 2010 | Authors: Yvonne Y.F. Chan; Robert M. Hirsh; David S. Huntington; Marco V. Masotti
  • Law Firm: Paul, Weiss, Rifkind, Wharton & Garrison LLP - New York Office
  • On June 25, 2010, a House-Senate conference committee reached final agreement on the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). Included in Title IV of the Act is the Private Fund Investment Advisers Registration Act of 2010, which eliminates the “private adviser exemption” from SEC registration currently contained in Section 203(b)(3) of the Investment Advisers Act of 1940 (the “Advisers Act”) for investment advisers who do not hold themselves out to the public as investment advisers and have fewer than 15 clients. As a result, many investment advisers to private funds (with some exceptions) will be required to register with the SEC. Importantly, the conference committee agreed to delete a provision in the Senate’s version of the bill that would have exempted “private equity fund” advisers from registration with the SEC. Registered advisers will be subject to substantial regulatory reporting and recordkeeping requirements regarding the private funds they advise. In addition, the Act effectively raises the assets under management (“AUM”) threshold for federal registration of investment advisers to $100 million, with those advisers falling below such threshold becoming subject to state registration and regulation. Title IV becomes effective one year after the date of enactment (presumably July 2011), during which time the SEC is expected to adopt rules and regulations providing procedures for registration and reporting. Investment advisers to private funds may voluntarily register with the SEC during this one-year period.