Publications

As many non-US investment advisers are learning, the Dodd‐Frank Act’s so‐called “private fund adviser” exemption* is really not an “exemption” at all. Investment advisers within its scope – “exempt reporting advisers” (or “ERAs”) – are exempt from registration under the Investment Advisers Act, it is true; but they are not exempt from the SEC’s reporting requirements, nor are they exempt from SEC examination for cause, the practical risk of which remains to be seen.

Interpreted by the SEC to include virtually every non‐US private fund manager with no or only limited advisory operations in the United States – no matter the size of the fund portfolios managed on US investors’ behalf – the private fund adviser exemption is very broad, giving rise to a very large number of non‐US ERAs. Many of these ERAs are advisers who before Dodd‐Frank had no expectation of ever being subject to supervision in the United States, and who are finding their first encounter with the SEC’s regulatory and enforcement apparatus to be puzzling, to say the least.

This collection of materials – A Guide for the Perplexed – is aimed at answering non‐US ERAs’ most frequently‐asked questions and addressing their most frequently‐expressed concerns as the March 30, 2012 deadline for filing of initial ERA reports draws nearer. The Guide is bookmarked to help you navigate the following contents:

• a copy of the June 2011 Clifford Chance client alert on the SEC’s final rules for non‐US investment advisers under Dodd‐Frank;
• a one‐page suggested timeline for Form ADV filings by ERAs, covering the period from now until March 30, 2012;
• a brief how‐to on gaining access to IARD electronic filing system, together with a copy of the FINRA Entitlement Packet containing application and related materials;
• a complete copy of SEC Form ADV (including schedules, supplementary forms and official  instructions), with annotations that highlight provisions applicable to ERAs and hyperlinks to other relevant parts of the Guide;
• a summary of our advice on combined ERA reporting by commonly‐controlled investment advisers, an area where we have been working closely with the SEC staff;
• a note concerning an interpretive issue of particular importance to non‐US ERAs – the extent to which criminal offenses under non‐US law must be reported as “felonies” on Form ADV and related schedules; and
• our suggested template for an internal compliance policy under the SEC’s “pay‐to‐play” rule, which is currently the only substantive rule under the Advisers Act applicable to ERAs.

Contact us to request a copy of Exempt Reporting Advisers: A Guide for the Perplexed (downloadable PDF format)