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US financial reform law: key changes for private fund managers under the US Investment Advisers Act and changes to certain investor eligibility qualifications

Thomas John Holton (Partner, Investment Management, Bingham McCutchen LLP, Boston, Massachusetts, USA)
Paul B. Raymond (Partner, Investment Management, Bingham McCutchen LLP, Boston, Massachusetts, USA)
Curtis Stefanak (Counsel, Investment Management, Bingham McCutchen LLP, New York, New York, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 23 November 2010

281

Abstract

Purpose

The purpose of this paper is to explain certain SEC and state registration, disclosure, and recordkeeping requirements for US and non‐US investment advisers and fund managers as defined in the Dodd‐Frank Wall Street Reform and Consumer Protection Act of 2010.

Design/methodology/approach

The paper explains SEC and US state registration requirements; the elimination of the “private adviser” exemption; the creation of new, narrower adviser registration exemptions; reporting and recordkeeping requirements relating to private funds; information and confidentiality provisions for private funds; the SEC's authority to make rules and regulations defining technical, trade, and other terms used in the amendments set forth in the Act; provisions of the “Volcker Rule” concerning banking entities' ownership interests in hedge funds and private equity funds; the adjustment of the “qualified client” test for inflation; the definition of an “accredited investor”; and disqualifications from using Regulation D.

Findings

The Act will require many US and non‐US investment advisers and fund managers to register with the SEC under the Investment Advisers Act of 1940, particularly those advisers that have previously relied on the “private adviser” exemption from SEC registration, which has been eliminated by the Act. The Act will also impose new disclosure and recordkeeping requirements on many investment advisers, including some who are not required to register with the SEC.

Originality/value

The paper provides expert guidance from experienced financial services lawyers.

Keywords

Citation

Holton, T.J., Raymond, P.B. and Stefanak, C. (2010), "US financial reform law: key changes for private fund managers under the US Investment Advisers Act and changes to certain investor eligibility qualifications", Journal of Investment Compliance, Vol. 11 No. 4, pp. 9-18. https://doi.org/10.1108/15285811011098929

Publisher

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Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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