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Dodd-Frank 30 Day Countdown: Day 26

Insight Robin Powers Robin Powers · June 20, 2011

Investment Advisor Registration Deadline Causing Confusion

In the Private Fund Investment Advisers Registration Act of 2010, Congress adopted changes to the Investment Advisers Act of 1940 to require many more managers of hedge funds or private equity funds to register as investment advisers. Registered advisers are expected to update their books and records practices in order to comply with the new requirements, and may also need to alter their asset valuation and asset custody practices.  Some advisers will likely hire additional compliance staff in order to meet the Dodd-Frank requirements.

While the bill caused concern among investment advisers about the process of registration and the burden of regulation, that concern has changed into confusion as the SEC has not yet clearly defined a date for registration to begin. Originally the SEC had intended July 21 to mark the deadline at which all managers with $150 or more in assets under management (AUM) would need to be registered. The SEC has now announced that the final vote relating to the rules underlying the registration requirements will take place on June 22.

As a result, investment advisers are now left with the possibility of breaking registration rules before they have even been entered into the SEC’s system. Most advisers appear to be relying on the SEC extending the deadline for registration, as the SEC and CFTC have done with other aspects of the Dodd-Frank Act under their respective jurisdictions.

Investment advisers may soon be scrambling to ensure all their necessary requirements are in order once the SEC finalizes its vote in a couple of days, this despite doubts that the overburdened SEC is capable of handling thousands of new registrations on top of all their other responsibilities arising from Dodd-Frank.

-Stephanie Kane co-authored this post