SEC exemptions by dfsiopmhy6


									 SEC registration for non-US managers
 Proposed exemptions

Foreign private advisers

The Dodd-Frank Act passed in the US in July 2010 means that foreign private advisers (UK hedge fund or private equity
managers, for example) are exempt from having to register with the Securities and Exchange Commission (SEC) if they meet all
the following criteria:

        have no place of business in the US;

        manage less than $USD25m of investments from US investors;

        have fewer than 15 US investors; and

        do not hold themselves out generally to the public in the US as an asset manager.

There will be no SEC reporting requirements for these firms under the proposals.

New proposals – “exempt reporting advisers”

On 19 November, the SEC proposed two further exemptions to the registration requirements, creating a new category of
“exempt reporting adviser”.

“Exempt reporting advisers” are those that manage:

    (i) solely private funds and have less than $150 million in AUM in the US
    (ii) solely venture capital funds

Both these categories are defined further in the proposals. Under the proposed rules, an asset manager that falls into the
“exempt reporting adviser” category would avoid the need to be SEC registered. However, they would still be subject to
reporting requirements to the SEC, record-keeping requirements and examination by the SEC. The “exempt reporting adviser”
would use the same FORM ADV I registration document as a fully registered adviser, but would not be required to complete
the form in full. Filings with the SEC would be made publicly available. The SEC is also proposing that “exempt reporting
advisers” report on all private funds they manage.

Unfortunately this means that although “exempt reporting advisers” do not need to be registered with the SEC, under the
proposals they could be subject to examination and scrutiny by the SEC. This could be as thorough as for a fully registered
adviser and means that they will need to have adequate compliance arrangements in place.

In addition, firms relying on the exemption will need to monitor their US business to ensure they remain exempt. For instance,
private fund advisers who manage less than $150 million will need to calculate their AUM on a quarterly basis. If an asset
manager becomes ineligible to reply on the private fund exemption due to an increase in AUM above $150 million, it is
permitted one calendar quarter to register with the SEC.
 SEC registration for non-US managers
 Proposed exemptions

Please note that the SEC is inviting comment on these proposals by mid January 2011, although the final deadline is still to be
announced. The SEC will then have to make final rules, which are likely to be announced in Q1 of 2011

Next steps

       You need to assess whether the foreign private adviser exemption applies to your business. If so, SEC registration and
        reporting is not required.
       If the foreign private adviser exemption does not apply, you should assess whether either of the two new proposed
        exemptions apply. If so, it is likely that you will still need to have a compliance infrastructure and reporting procedures
        in place.
       If none of the exemptions apply, you need to appoint a compliance office for SEC purposes and start considering the
        steps required for SEC registration.

Although these proposed rules are still to be finalised, you need to start preparing now due to the 21 July 2011 deadline.

How we can help

For those firms caught by the SEC regime, we can assist you with the SEC registration process and the set up of compliance
procedures and infrastructure.

To find out more, please contact:

 Bryony Livingstone (London)                                                  Jane Stoakes (London)
 t: +44 20 7862 0873                                                          t: +44 20 7862 0876
 e:                                   e:

 Julian Korek (London/New York)                                               Jon Saxton (London/New York)
 t: +44 20 7862 0802 / +1 212 646 867 7830                                    t: +44 20 7862 0700 / +1 646 867 7825
 e:                                         e:

 Chris Lombardy (New York)
 t: +1 646 867 7824

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