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Newly Created Dodd-Frank Adviser Exemptions Are No Vacation from the Advisers Act

Attention venture capital fund managers and small private fund advisers: newly created investment adviser exemptions are no vacation from regulatory requirements. The Securities and Exchange Commission (SEC) adopted final rules implementing new exemptions from the registration requirements of the Investment Advisers Act of 1940 (Advisers Act), in order to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that create exemptions for advisers to venture capital funds and small private fund advisers. The new rules, Rule 203(l)-1, which defines a “venture capital fund” for purposes of the exemption and Rule 203(m)-1, which provides an exemption from registration for advisers with less than $150 million in private fund assets under management in the United States, went into effect July 21, 2011. This article outlines what investment advisors need to know regarding compliance, reporting and recordkeeping requirements under the Advisers Act.

This article was originally published by Bloomberg Finance L.P in the Vol. 5, No. 45 edition of the Bloomberg Law Reports – Securities Law. Permission for article reprint has been granted.

Stephen H. Cohen is a partner in the New York office of Loeb & Loeb LLP, where he focuses his practice on broker-dealer regulation and the securities markets. He also heads the firm’s Dodd-Frank Financial Reform Task Force, facilitating the registration and exemption process for private fund managers. He can be reached at 212.407.4279.