Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

Robert Plaze, Associate Director of the SEC’s Division of Investment Management, recently sent a letter to the Deputy Securities Administrator, North Carolina Securities Division and the President, North American Securities Administrators Association, Inc. signaling a potential delay in registration requirements for private equity groups, hedge funds and investment advisers related to the Dodd-Frank Act.  Specifically Mr. Plaze’s letter addressed the following: 

  • Section 403 of the Dodd-Frank Act also repeals, as of July 21,2011, the private adviser exemption in section 203(b)(3) of the Advisers Act and will require advisers relying on that exemption (including advisers to many hedge funds and other private funds) to register with the SEC.  In addition, the Dodd-Frank Act provides some new exemptions, such as for advisers to venture capital funds and advisers to private funds with less than $150 million in assets under management in the United States.  Those new exemptions require SEC rulemaking. As noted above, we anticipate that the SEC will issue those final. rules in advance of July 21.  However, given the time needed for advisers to register and come fully into compliance with the obligations applicable to them once they are registered, it is expected that the SEC will consider extending the date by which these advisers must register and come into compliance with the obligations of a registered adviser until the first quarter of 2012.
  • In accordance with section 410 of the Dodd-Frank Act, “mid-sized advisers” (certain advisers having between $25 million and $100 million of assets under management) will have to withdraw from registration with the SEC and register with one or more states pursuant to state law. Once the SEC adopts the implementing rulemaking, the Investment Adviser Registration Depository system (lARD) will require re-programming to accept advisers’ transition filings. The SEC understands that the re-programming process will take until the end of the year to complete. Accordingly, we expect that the SEC will consider extending the date by which mid-sized advisers must transition to state regulation such that all SEC-registered advisers would be required to report their eligibility for registration with the SEC in the first quarter of 2012.  Those no longer eligible for SEC registration (i.e., mid-sized advisers) would have a grace period providing them time to register with the appropriate state regulators and come into compliance with state law before withdrawing their SEC registration.

Check frequently for updates on the Dodd-Frank Act and other important securities law matters.

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