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News January 23, 2012 Issue

What’s Going to Happen With All Those Private Fund Adviser Registration Applications?

February 14 will be here in a few weeks, and registering advisers are scrambling to submit their applications by this de facto deadline. Filing later will not provide the 45 days the SEC allows itself to declare an application effective by March 30. March 30 is the extended compliance deadline by which private fund advisers that are required to be registered must have an effective registration statement with the SEC.

Remember too, that in advance of the February 14 filing date, advisers must have established the Investment Adviser Registration Depository (IARD) filing and funding accounts necessary to effect the filing. Those accounts involve a "snail mail" component and the deposit and clearing of funds that as a result, can take up to several weeks to establish.

In other words, advisers should be actively working on setting up those IARD accounts now.

The SEC says they’re ready for the significant number of applications that are expected to arrive by February 14.

The SEC estimates that approximately 750 private fund advisers will register with the SEC as the result of Dodd-Frank Act legislation. Last week, the SEC released some guidance to registering advisers in the form of no-action relief (see related story, this issue) that may affect the number of applications the SEC will see.

"This is a great unknown for us," said one informed source on the staff about whether the estimated 750 adviser applications holds true. "We’re going to take it as it comes." The staff has been preparing for the last six months said the source, and they are prepped and ready for the applications to come in.

OCIE has the primary responsibility to review and approve adviser applications for registration. Staff from the Division of Investment Management is monitoring the number of registration requests that are submitted and will evaluate what, if any, assistance they might offer OCIE if the circumstance warrants in this unique situation.

Since the first of the year, approximately 78 new adviser registration applications have already arrived, said the source. Application approvals issue almost every day, and the staff is committed to keeping up with demand. However, assuming the SEC’s estimates are correct that approximately 750 advisers will submit registration applications, "it looks like most of them haven’t filed yet."

The IARD system is not expecting any issues with respect to accepting a significant number of filings on or around February 14. However, you probably don’t want to be the adviser that tests the system by submitting your application for registration at 10:55pm – or later – on February 14, when the IARD system shuts down at 11pm.