On November 19, 2010, the SEC proposed new rules and amendments to the Investment Advisors Act of 1940 to implement Title IV of the Dodd-Frank Wall Street Reform Act.
Form ADV will be amended for a one-time transition filing for SEC registered adviser at July 21, 2011. You must file an amendment no later than August 20, 2011, adhering to the proposed registration amendments.
If you are no longer eligible for SEC registration, complete Form ADV-W no later than October 19, 2011.
However, the proposal allows advisers to remain registered with states, whose assets under management (“AUM”) are greater than $30 million, but less than $100 million, and have not registered with the SEC from January 1, 2011 until October 19, 2011, provided that they are subject to state examination.
New rule 204-4 would require exempt reporting advisers to file reports electronically on Form ADV using the same process as registered advisers. The exempt advisers as proposed by new section 203(l) are advisers solely to venture capital funds and private funds in the United States with AUM of less than $150 million.
The SEC also proposed amendments to three of the exemptions from prohibition from SEC registration. First, nationally recognized statistical rating organizations would be prohibited from registration. Second, pension consultants with plan assets of less than $200 million are prohibited from SEC registration. The $50 million threshold was increased because Congress increased the SEC registration AUM threshold from $25 million to $100 million. Third, the multi-state exemption from registration prohibition was reduced from less than 30 states, to more than 15 states for mid-size advisers (AUM between $25 and $100 million).
The SEC proposed to change the calculations of regulatory AUM to include those securities portfolios for which advisers provide continuous and regular supervisory or management services. An account is a securities portfolio account if at least 50% of the total value of the account consists of securities. For purposes of this 50% test, securities include:
- Bank deposits, certificates of deposit, bankers acceptances, and similar bank instruments;
- Adviser family or proprietary accounts;
- Accounts which are charged no compensation for services;
- Accounts of clients who are not United States persons;
- All assets of private funds, including uncalled capital contribution commitments.
Item 7.B and Section 7.B of Schedule D is proposed for exempt reporting private funds advisers to report pooled investment vehicles regardless of whether they are organized as limited partnerships.
Finally, the SEC proposed to amend form ADV to include new information about employees, and more information about clients and advisory activities.