SEC Extends Registration Deadline for Hedge Fund and Private Equity Fund Managers

By David Mainzer

June 2011

Managers of hedge funds and private equity funds currently are not required to register with the SEC as investment advisers if they come within the "private adviser exemption" from registration. The private adviser exemption is generally available to investment managers with fewer than 15 clients (each fund is typically treated as one client) that do not hold themselves out to the public. This is set to change pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which eliminated the private adviser exemption effective July 21, 2011. As a result, a significant number of investment managers of hedge funds and private equity funds (i.e. those with fewer than 15 clients and $150 million or more in assets under management) will be required to register as investment advisers with the Securities and Exchange Commission (the "SEC").

With the July deadline approaching, on June 22, 2011, the SEC sensibly adopted a "transitional exemption" to allow the affected hedge fund and private equity fund managers sufficient time to register as investment advisers and put in place the necessary compliance infrastructure. As a result, hedge fund and private equity fund managers that have $150 million or more in assets under management, and currently come within the private adviser exemption, will have until March 30, 2012 to register as investment advisers with the SEC.

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