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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
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
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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