April 11, 2011

Extension of Compliance Dates for New Investment Adviser Registration and Transition to State Registration Appears Likely

The SEC posted a letter to its website on Friday, April 8 indicating that:

By July 21, 2011, the SEC expects to adopt final rules implementing provisions of the Dodd-Frank Act that have the effect of: (i) requiring most advisers that now rely on the private adviser exemption to register; (ii) exempting from that requirement certain venture capital fund advisers as well as advisers to private funds with less than $150 million of assets under management in the United States; and (iii) requiring many SEC-registered advisers with less than $100 million in assets under management to switch to state registration.

The Staff anticipates that, in connection with the adoption of the final rules, the SEC will extend until the first quarter of 2012: (i) the date by which advisers who previously relied on the private adviser exemption must be registered with the SEC (which absent an extension would be July 21, 2011); and (ii) the date by which all currently registered advisers must file an amended Form ADV indicating whether the adviser remains eligible for SEC registration (which absent an extension would be August 20, 2011).


The letter cites, as reasons for an extension, a need for more time for: (i) advisers that are losing the private adviser exemption as a result of Dodd-Frank to register and come into compliance with the Advisers Act; (ii) advisers that must switch to state registration to register with the states, come into compliance with state law and withdraw from SEC registration; and (iii) reprogramming the Investment Adviser Registration Depository (IARD) to accommodate these filings as well as any amendments to Form ADV that are adopted with the final rules.

This is only a potential change in timing and does not alter whether or where an adviser will need to register. While an extension of the compliance dates is likely, it is not certain and the timing is not guaranteed. Therefore, affected advisers should continue to prepare for registration with the SEC or one or more states and to develop their compliance infrastructure. We expect to provide additional commentary about this development in the coming weeks.

For background on the SEC’s proposed rulemaking, please see the December 2010 DechertOnPointSEC Proposes New Investment Adviser Oversight Rules.” For background on Dodd-Frank’s impact on investment advisers, please see the July 2010 DechertOnPointThe Impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on the Registration Obligations of Private Fund Advisers.”

For More Information

If you have questions regarding the information in this update, please contact one of the lawyers listed or any Dechert lawyer with whom you regularly work. Visit us at www.dechert.com/financialservices.

Karen L. Anderberg
London
+44 20 7184 7313
karen.anderberg@dechert.com

Julien Bourgeois
Washington, D.C.
+1 202 261 3451
julien.bourgeois@dechert.com

Robert M. Friedman
New York
+1 212 649 8735
robert.friedman@dechert.com

Christopher P. Harvey
Boston
+1 617 728 7167
christopher.harvey@dechert.com

Jane A. Kanter
Washington, D.C.
+1 202 261 3302
jane.kanter@dechert.com

Angelyn Lim
Hong Kong
+852 3518 4718
angelyn.lim@dechert.com
George J. Mazin
New York
+1 212 698 3570
george.mazin@dechert.com

Keith T. Robinson
Hong Kong
+852 3518 4705
keith.robinson@dechert.com

Kevin P. Scanlan
New York
+1 212 649 8716
kevin.scanlan@dechert.com

Michael L. Sherman
Washington, D.C.
+1 202 261 3449
michael.sherman@dechert.com

M. Holland West
New York
+1 212 698 3527
holland.west@dechert.com

Jennifer Wood
London
+44 20 7184 7403
jennifer.wood@dechert.com

© 2011 Dechert LLP. All rights reserved. This publication should not be considered as legal opinions on specific facts or as a substitute for legal counsel. It is provided by Dechert LLP as a general informational service and may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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