Adviser Registration

2014-10-13

The Dodd-Frank Act requires hedge fund advisers with $100 million or more in assets under management (AUM) and advisers to only private funds with at least $150 million in AUM to register with the Securities and Exchange Commission (SEC). Investment advisers with AUM below those thresholds are generally subject to state registration requirements. Hedge fund advisers are required to register with the SEC by March 30, 2012.

The Investment Advisers Act of 1940 imposes significant disclosure and compliance requirements on SEC-registered hedge fund advisers, including: regularly submitting information to the SEC regarding the adviser’s business that is made publicly available; reporting extensive systemic risk information to the SEC; providing detailed disclosure to clients; implementing comprehensive policies and procedures to ensure compliance with federal securities laws; maintaining extensive books and records; and being subject to periodic inspections and examinations by SEC staff.

As a result of the Dodd-Frank Act, the SEC will have clear oversight authority of, and regularly receive extensive information about, the private fund industry, and will be responsible for implementing and enforcing rules across all aspects of managers’ businesses. MFA believes this enhanced framework for regulating hedge fund managers is effective and should be maintained.

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