• Blue Sky Issues of Financial Reform Legislation for Hedge Fund Advisers
  • April 30, 2010 | Authors: Steven David Lofchie; Alan M. Parness
  • Law Firm: Cadwalader, Wickersham & Taft LLP - New York Office
  • The “Restoring American Financial Stability Act of 2010” (the “Dodd Bill”), presently being considered by the U.S. Senate, if enacted as proposed, would have significant consequences for investment advisers managing hedge funds and similar private investment funds, whether presently registered, or exempt from registration, with the U.S...In sum, a significant number of advisers will become subject to investment adviser registration under one or more state securities (“Blue Sky”) laws, and will in many cases find themselves subject to a disparate and non-uniform set of Blue Sky laws, rules, regulations, and policies governing investment advisers and their “investment adviser representatives.” Unless Blue Sky Laws are conformed (which does not seem likely) or smaller advisers are given the ability to register with the SEC and benefit from federal preemption of Blue Sky regulation, small advisers will face substantial additional expenses and potential problems in attempting to comply with these state laws.