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Filing Deadline for Exempt Investment Advisers

Under changes recently made to the Investment Advisers Act of 1940 by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), investment advisers to small private funds are required to register and/or file reports with the Securities and Exchange Commission (SEC). The March 30, 2012 filing/registration deadline is quickly approaching. Even certain exempt advisers, including advisers to hedge funds, certain private investors and venture capital funds, are now required to file certain limited reports with the SEC.

One of the most significant changes stemming from Dodd-Frank was the repeal of the Private Adviser Exemption, on which many advisers to hedge funds and other private funds relied.1 As a result of Dodd-Frank, all advisers with at least $100 million of assets under management must register with the SEC, unless they qualify for one of the exemptions from registration.2

Dodd-Frank also created a new category of advisers called “mid-sized advisers”, which are subject to state registration. Mid-sized advisers are advisers that have assets under management of $25-$100 million; are required to be registered in the state where their principal office and place of business (the “home state”) are maintained; and are subject to examination by state regulators, if required to register in their home state. These advisers for the most part will be required to switch from registration with the SEC to state registration, although, like all advisers, they will continue to be subject to the general anti-fraud provisions of the Investment Advisers Act.3

Two new exemptions, however, were made available to advisers of private funds (“exempt reporting advisers”): (1) the Venture Capital Exemption (Section 203(l) of the Act), which provides an exemption for an adviser that advises solely one or more “venture capital funds,” and (2) the Private Fund Adviser Exemption (Section 203(m) of the Act), which provides an exemption for an adviser that acts solely as an adviser to private funds and has assets under management in the U.S. of less than $150 million.4 Exempt reporting advisers, while exempt from registration, are nonetheless required to report to the SEC by filing a limited Form ADV.

As noted, the deadline for registration with the SEC and for filing the reports is March 30, 2012.5 The reports and registrations should be filed through the SEC’s investment adviser electronic filing system (IARD); they will be publicly available on the SEC’s website.

The report to be filed by exempt reporting advisers consists of the following items of Form ADV:


  • Basic identifying information for the adviser and the identity of its owners and affiliates.
  • Information about the private funds the adviser manages and about other business activities in which the adviser and its affiliates are engaged and that present conflicts of interest that may suggest significant risk to clients.
  • The disciplinary history (if any) of the adviser and its employees that may reflect on the integrity of the firm.

Exempt reporting advisers must amend their reports on form ADV: (i) at least annually, within 90 days of the end of the adviser’s fiscal year; and (ii) more frequently, as may be required by the instructions to Form ADV. Additionally, an exempt reporting adviser must update its Form ADV promptly if Item 1 (Identification Information), Item 3 (Form of Organization), or Item 11 (Disciplinary Information) becomes inaccurate in any way, or if material changes occur to the information in Item 10 (Control Persons).

The SEC has indicated that it does not intend to conduct routine examinations of exempt reporting advisers. However, the SEC has retained discretionary authority to do so, if necessary. The SEC plans to evaluate the information collected over the first year and then reconsider the scope of information collected.

If you have any questions, or if we can assist you in complying with your new obligations under the Act, please feel free to contact the Gordon Feinblatt attorney with whom you regularly work, or contact one of the following attorneys:

Abba David Poliakoff - 410-576-4067 Andrew D. Bulgin - 410-576-4280
Michele B. Walsh - 410-576-4216 John C. Morton - 410-576-4176
1 Section 203(b)(3) previously exempted any adviser from registration with the SEC if the adviser had fewer than 15 clients in the preceding 12 months, did not hold itself out to the public as an adviser, and did not act as an adviser to a registered investment company.
2 Under prior law, advisers generally could not register with the SEC unless they had at least $25 million in assets under management.
3 In certain limited circumstances mid-sized advisers are required to remain registered with the SEC. For example, mid-sized advisers are required to be registered with the SEC if they advise registered investment companies or business development companies, or if the mid-sized advisers’ home state does not register or examine advisers.
4 An adviser is not required to rely on one of these exemptions – rather, advisers may choose to register (or, if already registered, remain registered) with the SEC as long as they comply with all registration requirements.
5 For those registering for the first time, applications should be filed with the SEC by February 14, 2012 to ensure that the registration is effective by the deadline.