In addition to expanding the number of investment advisers who must file a Form ADV, the SEC also adopted a number of amendments to the form itself. Therefore, it is important that previously registered investment advisers are prepared to provide a significant amount of new information.
Form ADV now requires, among other things, all registered investment advisers to provide more detailed information about:
- Their advisory business, including the type of clients they have, their employees, and their advisory activities;
- Their business practices that may present significant conflicts of interests, including the use of affiliated brokers, soft dollar arrangements, and compensation for referrals; and
- Their non-advisory activities and their financial industry affiliations.
- Five categories of “gate keepers” that perform critical functions for the advisers and the private funds they manage, specifically auditors, prime brokers, custodians, administrators, and marketers.
Advisers to Private Funds
Under the new rules, advisers to private funds are required to provide additional information about each fund they manage, including:
- Name of fund;
- State or country of organization;
- Names of general partner, directors, trustees or persons with similar positions;
- Structure (whether it is a feeder or master fund);
- Regulatory status, including the exemption from the 1940 Act on which it relies;
- Whether the fund relies on an exemption from registration of its securities under the Securities Act of 1933;
- Whether the fund is subject to regulation by a foreign regulatory authority;
- Whether the adviser is a sub-adviser to the fund;
- Identity of any other investment adviser to the fund;
- Gross asset value of the fund;
- Type of investment strategy;
- Number and types of investors in the fund;
- Minimum amounts required to be invested;
- Whether clients of the adviser are solicited to invest.
How We Can Help Ensure Compliance
The regulatory burdens placed on hedge funds and private equity groups have grown dramatically, leaving many companies overwhelmed by compliance issues. You should consult with experienced counsel to meet the new rules.
With the March 2012 deadline fast approaching, advisers to hedge and private equity funds should be beginning the registration process in earnest. If you are concerned about your company’s progress, please contact us to find out how we can help.
Eckerle Law offers a highest-quality and cost-effective alternative to the traditional law firm model for a wide variety of transactional and regulatory matters serving all your business law needs. Our experienced attorneys also provide a full range of compliance services for investment advisers, offering compliance tools that are tailored to fit the ever changing regulatory landscape as well as your business needs.
If your company would like to strengthen its business practices, please contact us today so we can leverage our experience to create real-life business and legal solutions to help your business thrive.