Industry Comment

Clarification on final position still awaited

Tuesday, March 08, 2011

While views still differ in the City, it seems that the dramatic impact of the Dodd Frank Act may be less than initially feared.  It still remains important though.

When the Act was passed in July 2010, industry thought that any EU houses with total commitments in excess of US$25 million would be forced to register with the SEC by summer 2011.

The SEC then published guidance in November 2010 suggesting that it would interpret the “mid-sized private fund advisers” exemption more broadly, in effect, exempting all houses with no US office from full registration. 

While this is a significant improvement, many of these houses may still be “Exempt Reporting Advisers” (or ERAs) that are required to claim exemption by filing a Form ADV Part 1 with the SEC before 20 August 2011. This is an annual filing that requires updating every time a material change occurs.

The final position will be clarified by the SEC when in publishes its final rules in April or May this year. This will leave very little time for houses to respond so they should be prepared.