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News June 13, 2011 Issue

Final Private Fund Adviser Rules Anticipated June 22

Get ready, the end is near.

Next week it is expected that the SEC will put an end to all the speculation for many private fund advisers about whether they will or will not have to register.

On June 22, almost exactly one month before the July 21 Dodd-Frank Act (DFA) deadline for rulemaking, the SEC has scheduled an open meeting to consider adopting new rules and rule amendments related to various provisions affecting advisers under Title IV of DFA.

The rules and rule amendments being considered will:

  • define family offices for purposes of excluding them from required registration under the Advisers Act;
  • define exempt reporting advisers that are venture capital fund advisers or private fund advisers with less than $150 million under management;
  • increase the assets under management threshold for eligibility to register with the SEC;
  • require hedge fund and other private fund advisers to register with the SEC; and
  • clarify certain terms related to exempt foreign private fund advisers.

SEC Chairman Mary Schapiro testified before Congress that she anticipated the SEC would complete these implementing rulemakings by July 21. Division of Investment Management associate director Robert Plaze said the same in an April 8 letter to the North American Securities Administrators Association.

If the SEC does not adopt final rules and rule amendments on June 22, there will still be time to try again. However, with the deadline looming and many other irons in the SEC’s fire, it is not likely, said one industry observer, that the Commission has scheduled consideration without some level of confidence that they’ve got the votes for approval.