Earlier this month, the House approved the Wall Street Reform and Consumer Protection Act of 2009 (the “Act”). Title V of the Act includes the Private Fund Investment Advisers Registration Act which requires advisers to private equity funds and other private pools of capital with assets under management of at least $150 million to register as an investment adviser with the Securities and Exchange Commission (the “SEC”).

Section 203(b) of the Investment Advisers Act currently provides an exemption from the registration requirements to an investment adviser who, during any 12-month period, had fewer than 15 clients and who does not hold itself out generally to the public as an investment adviser. In counting the number of clients the fund itself, rather than the investors in any such fund, is treated as the client.

The 15-client exemption is eliminated under the Act, and is replaced with the general requirement that an investment adviser to any private equity fund or other private pool of capital must register with the SEC. The Act, however, provides the following exemptions from this registration requirement:

1. Foreign Advisers
2. Advisers to funds with less than $150 million in assets under management.
3. Venture Capital Funds

The Act further requires registered advisers to maintain and file with the SEC records regarding the amount of assets under management, the use of leverage, including off-balance sheet leverage, counterparty credit risk exposures, trading and investment positions, trading practices and any other information the SEC or the Federal Reserve deem necessary and appropriate.

This entry was posted on Saturday, December 26th, 2009 at 9:10 pm and is filed under Regulatory Reform. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.