New Rules for Investment Advisers: Requirements for Exempt Reporting Advisers

adviser compliance attorneyUnder the new requirements issued by Securities and Exchange Commission, certain investment advisers may fall under the category of “exempt reporting adviser.” This designation includes advisers to venture capital funds and advisers to private funds that have assets under management of less than $150 million. Unfortunately, exempt advisers are not off the hook when it comes to reporting requirements. The SEC still imposes certain reporting requirements upon advisers relying upon either of these exemptions.

Under the new rules, exempt reporting advisers will nonetheless be required to file, and periodically update, reports with the SEC, using the same registration form (Form ADV) as registered advisers. Exempt reporting advisers will file reports using the SEC’s investment adviser electronic filing system (IARD), and these reports will be publicly available on the agency’s website

Reporting Requirements for Exempt Reporting Advisers

Rather than completing all of the items on the form, exempt reporting advisers will fill out a limited subset of items, including:

  • Basic identifying information for the adviser and the identity of its owners and affiliates.
  • Information about the private funds the adviser manages and about other business activities that the adviser and its affiliates are engaged in that present conflicts of interest that may suggest significant risk to clients.
  • The disciplinary history (if any) of the adviser and its employees that may reflect on the integrity of the firm.

Reporting Deadlines for Exempt Reporting Advisers

An exempt reporting adviser must submit its initial Form ADV within 60 days of relying on the applicable exemption from registration. Each Form ADV is considered filed with the SEC upon acceptance by the IARD.  Under the transition provisions of the new rules, exempt reporting advisers must file their first reports on Form ADV through IARD between January 1 and March 30, 2012.

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.