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As a result of the new rules under the Investment Advisers Act of 1940, even fund managers that are exempt from registration will need to file annual reports with the SEC. Exempt reporting advisers ("Exempted Advisers"), including fund managers that rely on either the venture capital fund exemption or the private fund adviser exemption, will be subject to SEC oversight as "exempt reporting advisers" and must complete and periodically update a portion of Form ADV, the same form used by registered advisers. This filing obligation becomes mandatory for Exempted Advisers beginning in the first quarter of 2012. Form ADV is being further amended to reflect other changes pursuant to the Dodd-Frank Act, but those other changes are technical changes applicable to registered investment advisers and are beyond the scope of this discussion, which focuses on Exempted Advisers.
An Exempted Adviser does not need to report any of this information to the SEC until March 30, 2012, but should plan to file their completed Form ADV (Parts 1 and 2) no later than February 14, 2012 to ensure compliance by the deadline. Form ADV filings are made electronically with the SEC through the Investment Adviser Registration Depository. Generally, these filings are made at least annually, within 90 days of the end of the adviser's fiscal year, and more frequently in certain cases. All information filed on Form ADV is publicly available.
What information must be provided?
Exempted Advisers will need to complete the following sections of Part 1A of Form ADV:
Private Fund Information to be Reported (Item 7.B. of Form ADV)
Fund managers, including Exempted Advisers, will need to provide detailed information about each private fund they advise by completing a separate Section 7.B. of Schedule D for each. I expect this to be one of the more controversial reporting obligations, as it has the risk of requiring funds to provide information that historically has been guarded as confidential by many fund managers.
Fund information that must be disclosed includes, for each private fund:
Fund managers also do not yet need to report fund performance; however, that also may change in the future, in the SEC's discretion.
This post is part of a series of recent posts on the new investment adviser rules issued by the SEC pursuant to the Dodd-Frank Act:
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