Dodd-Frank Act Impacts Private Fund Advisers
On July 15, 2010, the Senate approved the "Dodd-Frank Wall Street Reform and Consumer Protection Act" (the "Act"), previously passed by the House on June 30, 2010. President Obama is expected to sign the Act into law on July 21, 2010. The Act includes expansive financial industry regulatory reforms, including the "Private Fund Investment Advisers Registration Act of 2010" (the "PFIARA"). The PFIARA is similar to a prior version of the PFIARA introduced by Sen. Christopher Dodd (D-CT) in the Senate in March and included in H.R. 4173, which was originally passed by the House on December 11, 2009. The PFIARA will have a significant impact on advisers to certain private funds, including hedge funds, private equity funds, venture capital funds and various other investment vehicles, by (1) requiring the registration of certain unregistered advisers under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and (2) imposing additional reporting and disclosure requirements on investment advisers, including those already registered under the Advisers Act. The PFIARA lays out a framework for regulation of private fund advisers, but delegates to the Securities and Exchange Commission ("SEC") rulemaking authority for many of the details concerning the types of advisers that will be facing additional regulatory burden. As a result, private investment fund advisers will need to run their businesses with a renewed focus on compliance.
