On June 22, 2011, the Securities and Exchange Commission (the “SEC”) adopted final rules and rule amendments implementing the provisions of Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) through the issuance of two Releases. Release IA-3222 (the “Exemptions Release”) defines terms and addresses certain issues with respect to the new exemptions from registration provided to investment advisers. Release IA-3221 (the “Implementing Release” and, together with the Exemptions Release, the “Releases”) implements companion amendments to the Investment Advisers Act of 1940 (the “Advisers Act”).
The exemption provided by Section 203(b)(3) of the Advisers Act (the “Private Adviser Exemption”), on which many advisers to “Private Funds” have relied, was repealed by the Dodd-Frank Act, effective July 21, 2011. As anticipated, the SEC granted relief to such advisers by providing, pursuant to new subsection (e) of Rule 203-1, that such an adviser is “exempt from registration with the [SEC] as an investment adviser until March 30, 2012,” provided that such adviser satisfies conditions which closely follow the requirements of the Private Adviser Exemption. This Alert provides an overview of how the new exemptions will be interpreted under the Exemptions Release and implemented under the Implementing Release.