01/25/2012 10:36:00 AM EST
Private Fund Managers and SEC Registration
The SEC has provided a no action letter in response to an
American Bar Association request on guidance for private fund managers. The ABA
requested clarification that a group of funds could use a singe registration
where the fund managers are in a control relationship and conduct a single
advisory business subject to a unified compliance program. The theory is that
permitting a single registration (and a single Form ADV filing) to cover the
entire group of related advisers would more accurately reflect the full nature
and scope of the single advisory business conducted by the group. Therefore it
would be more informative for advisory clients and private fund investors as
well as the SEC.
The SEC agreed, subject to the following limits:
filing adviser and each relying adviser advise only private funds and
separate account clients that are qualified clients (as defined in Advisers Act
rule 205-3) and are otherwise eligible to invest in the private funds
advised by the filing adviser or a relying adviser and whose accounts
pursue investment objectives and strategies that are substantially similar
or otherwise related to those private funds.
relying adviser, its employees and the persons acting on its behalf are
subject to the filing adviser's supervision and control and, therefore,
each relying adviser, its employees and the persons acting on its behalf
are "persons associated with" the filing adviser (as defined in section
202(a)(17) of the Advisers Act).
filing adviser has its principal office and place of business in the
United States and, therefore, all of the substantive provisions of the
Advisers Act and the rules thereunder apply to the filing adviser's and
each relying adviser's dealings with each of its clients, regardless of
whether any client or the filing adviser or relying adviser providing the
advice is a United States person.
advisory activities of each relying adviser are subject to the Advisers
Act and the rules thereunder,and each relying adviser is subject to
examination by the Commission.
filing adviser and each relying adviser operate under a single code of
ethics adopted in accordance with Advisers Act
rule 204A-1 and a single set of written policies and procedures
adopted and implemented in accordance with Advisers
Act rule 206(4)-(7) and administered by a single chief compliance
officer in accordance with that rule.
filing adviser discloses in its Form ADV (Miscellaneous Section of
Schedule D) that it and its relying advisers are together filing a
single Form ADV in reliance on the position expressed in this letter and
identifies each relying adviser by completing a separate
Section 1.B., Schedule D, of Form ADV for each relying adviser and
identifying it as such by including the notation "(relying adviser)."
If I'm reading this right, it looks like you may be able
to wrap the registration requirement for the general partners of funds into a
single Form ADV Registration. Prior to this no action letter, I assumed you
needed to have each general partner enter into an investment management
agreement with the management company.
Given this, it looks like you may be able to take that
item off your list of things to do in the next few weeks and merely list the
general partners on the Form ADV (assuming you meet the other requirements).
additional commentary on developments in compliance and ethics, visit Compliance Building,
a blog hosted by Doug Cornelius.
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