Dodd-Frank Act threatening securities investment adviser business
Some Bahamas based investment fund managers may find they no longer qualify for Securities Exchange Commission (SEC) registration exemptions, as the US’ Dodd-Frank Act and other initiatives pile on new regulations for the funds industry.
Under Dodd-Frank, ‘foreign’ investment managers conducting business with US clients have until July 21, 2011 to register as investment advisors with the SEC unless they can meet new, stricter exemption standards. Financial institutions are busy preparing for the Foreign Account Tax Compliance Act (FATCA) and other developments. Brian Jones, assistant vice president at Winterbotham Fund Services told Guardian Business on Friday that with so many significant new regulations looming on the global horizon, a comprehensive approach to them is best.
“Overall these financial institutions are going to have to look for more comprehensive solutions to deal with the impact of the regulations, you can’t just look at one new regulation in isolation,” Jones said.
“The key is to be on top of all the new regulations as they come out to make one integrated new system to comply with.”
All the new rules for Dodd-Frank have not been finalized yet — some of them are already adopted and others are still being drafted, according to a May 2011 update from financial services firm KPMG. KPMG reported that the SEC has informally communicated that the deadline for registration may be extended to the first quarter of 2012.
Under Dodd-Frank the focus for investment managers and funds is on registration with the SEC as an investment advisor if they do not qualify for exemption, and new OTC (over the counter) derivatives and executive compensation rules.
Foreign investment managers are either considered ‘previously registered’ or ‘never registered’ under Dodd-Frank. Previously registered firms may remain registered and prepare for the OTC derivatives and executive compensation rules which will impact them once finalized.
Firms with US clients that have never registered, or investors previously exempted from registration under the 1940 Investment Advisers Act ‘Private Adviser Exemption’ may try to qualify for an exemption under the two exemptions classes of new Dodd-Frank provisions, or register with the SEC. First-time registration with the SEC may represent a daunting compliance, accounting and corporate governance challenge for firms. Qualifying to be exempted from registration will prove more difficult than in the past, however.
Investment Advisor Sec - News
Under Dodd-Frank, 'foreign' investment managers conducting business with US clients have until July 21, 2011 to register as investment advisors with the SEC unless they can meet new, stricter exemption standards. Financial institutions are busy
the SEC took action against the firms' principals, including their CCOs, and reprimanded them for violations to the Investment Advisers Act that continued even after the SEC and a consultant warned them that they needed to comply.
The Supreme Court has today ruled that an investment adviser cannot be held liable under SEC Rule 10b-5 for false statements included in a client mutual fund's prospectus because the statements were made by the mutual fund and not by its investment
SEC commissioners voted 5-0 today to seek comment on a rule that would increase disclosures required of broker-dealers who hold investor funds, building on a 2009 rule for investment advisers. The measure would require enhanced audits of 300 brokers
Get background information on both SEC- and state-registered investment advisers at Investment Adviser Public Disclosure database tulsaworld.com/SECinvestadvisers for both individuals and firms. Some manage investment portfolios, others financial
SEC to Revise Investment Adviser Rules under the Dodd-Frank Act ...
Asher.bearman@dlapiper.com
The SEC announced yesterday that it will be holding an open meeting on June 22, 2011, evidently to discuss new proposed changes to the new Advisers Act rules pending under Dodd Frank. For fund managers concerned about becoming subjected to Advisers Act registration once Dodd-Frank becomes effective, this should be welcome news, but it is not yet clear exactly what the SEC is proposing to change. As readers of The Venture Alley know, we are still waiting for final rulemaking on the Dodd-Frank Act changes to the Adviser's Act, including the venture capital fund exemption to registration, which were recently delayed .
Based on the SEC's notice, it appears that there will be three new topics for discussion at this meeting:
New rules/amendments to the Advisers Act that, apparently, would increase the exemption amount (above $150M?) and would address the reporting requirements currently proposed to be required of fund managers who qualify for exemption. Discussion regarding the proposed exemptions for managers of VC funds and of less than $150M, presumably including technical clarifications regarding some open questions under the proposed rules. Discussion regrding the "family office" exemption, which has, thus far, been tailored very narrowly.The full SEC release is below. Obviously, it's not clear exactly what the SEC is planning but one hopes these proposals will expand the proposed exemptions and reduce needless registration requirements. We will keep you posted on any further updates, as they're made available.
For more information on these issues, please also visit our prior summaries and comments:
'Venture Capital Fund' - Proposed Definition for Adviser's Act Exclusion Foreign Fund Managers - Exemptions under the new Adviser's Act Our Comment to the SEC's Proposed Rules under the Adviser's ActSunshine Act Meeting.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94-409, that the Securities and Exchange Commission will hold an Open Meeting on June 22, 2011 at 10:00 a.m., in the Auditorium, Room L-002.
The subject matters of the Open Meeting will be:
Item 1: The Commission will consider whether to adopt new rules and rule amendments under the Investment Advisers Act of 1940 to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These rules and rule amendments are designed to give effect to provisions of Title IV of the Dodd-Frank Act that, among other things, increase the statutory threshold for registration of investment advisers with the Commission, require advisers to hedge funds and other private funds to register with the Commission, and address reporting by certain investment advisers that are exempt from registration.
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