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News October 10, 2011 Issue

Reminder - Revised Deadlines

So many deadlines are coming and going that it is easy to lose sight of some of them.

Especially when some of them are – gratefully, or necessarily – extended.

Here are several deadlines that have been extended from the original, to help keep your compliance calendar up-to-date:

Pay-to-play rule ban on third-party solicitation will become effective June 13, 2012.

Originally set to become effective on September 13 under the pay to play rule, the ban on the use of third-party solicitors was altered this summer in connection with amendments to Form ADV.

Advisers may only compensate third-party solicitors that are subject to SEC oversight and examination and to a regulatory regime that the SEC has determined is equally or more stringent than the pay to play rule. As part of the Form ADV Part 1 amendments, the SEC added municipal advisors to the group of regulated entities excepted from the third-party solicitor prohibition, now that municipal advisors must be registered with, and are now subject to oversight by, the SEC.

Commenters successfully persuaded the SEC that other regulated entities that could meet the "equally or more stringent than the pay to play rule" test for regulation should also be excepted from the ban. In connection with its expanded definition of "regulated persons," the SEC extended the compliance date for the ban on third-party solicitation from September 13 to June 13, 2012.

"This extension will provide time for the MSRB and FINRA to adopt pay to play rules if they choose to do so and give third-party solicitors additional time to come into compliance with such rules," said the SEC in its release.

Certain FBAR filings are now due June 30, 2012.

The reports of foreign financial accounts, "FBARs," that advisers and their employees must file with the IRS generally require a lawyer’s expertise to sort out.

Generally, certain filers for periods ending in 2009 or earlier have until November 1 of this year to submit FBARs. For the annual period ended 2010 however, the deadline remained June 30 of this year.

The Treasury issued a notice earlier this year that said officers and employees of SEC-registered advisers with only signature authority over, but no financial interest in, a foreign financial account of the adviser or entities related to the adviser have until June 30, 2012 to file FBARs for the 2009 calendar year and earlier periods.

What is a "foreign financial account," and what constitutes a "financial interest" in such an account, are delicate matters. The Financial Crimes Enforcement Network (FinCEN) has said definitively that a foreign financial account does not include hedge funds or other private, pooled funds such as private equity funds. Mutual funds, however, are included under "other financial accounts" in the regulation. Financial interests in an account are held by named trustees, like lawyers, advisers, and other agents.

Oldies, but goodies:

Private fund adviser registrations must be effective with the SEC by March 30, 2012.

Effectively, any private fund adviser now required to register with the SEC as a result of the Dodd-Frank Act must file an application for registration with the SEC by February 14, 2012 in order to allow the 45-day period the SEC generally reserves to declare a registration effective.

Mid-size and smaller advisers required to transition to state registration must do so by June 28, 2012.

All SEC-registered advisers must update their Form ADV by March 30, 2012 – whether they would ordinarily be required to file an updating amendment or not – to include their calculation of regulatory assets under management (regulatory AUM). Regulatory AUM is a new metric included in the Form ADV Part 1 amendments adopted this summer. Once regulatory AUMs are disclosed, that will begin the process of determining which advisers must transition to state registration. Such advisers resident in New York and Wyoming will remain registered with the SEC because those states do not examine advisers, a prerequisite for transition to state supervision as set forth in the Dodd-Frank Act.