Dodd-Frank Exemptions

June 22, 2011 – At its Open Meeting today, the US Securities and Exchange Commission adopted long-anticipated new rules that will compel a significant number of investment advisers doing business in the United States to register with the Commission. 

Also adopted were rules which establish new reporting requirements for advisers and which impose reporting on certain advisers which will not be required to register.  The Commission also considered and adopted a rule defining the term “Family Office” and excepting advisers who meet its requirements from registration.

Of particular interest to non-US advisers are two new exemptions.  One is available to advisers whose clients in the US are exclusively private funds and which have less than $150 million in assets under management in the country.  The other, the Foreign Private Advisers exemption, is a narrow allowance for advisers with:

  • Less than $25 million in aggregate assets under management from U.S. clients and private fund investors.
  • Fewer than 15 U.S. clients and private fund investors.

It is also noteworthy that, in a statement to the Commissioners, the Division of Investment Management underscored its recommendation that the “Participating Affiliate” regime be left as-is.  Participating Affiliate arrangements allow non-US advisers (the “participating affiliate”) to provide advice through an SEC-registered affiliated if certain conditions are met.  These include the requirement that the personnel of the participating affiliate involved in U.S. advisory activities be deemed “associated persons” of the registered affiliate and subject to its supervision in these duties.  Also, the the SEC must have assured of adequate access to key books and records of the unregistered adviser and to its personnel to the extent needed to protect US investors and markets.

Tram N. Nguyen, of the SEC’s Office of Investment Adviser Regulation, stated “We are recommending that the Commission provide assurances that it is not withdrawing any prior Commission or Staff statements concerning the Unibanco line of no-action letters.”

Unibanco (more formally Uniao de Bancos de Brasileiros S.A., July 28, 1992) was the formative no-action letter establishing the SEC’s recognition of Participating Affiliate arrangements.

CompliGlobe is the only regulatory adviser based in multiple locations outside the United States that is dedicated to SEC regulation, managed by a former SEC lawyer and staffed with former Chief Compliance Officers and other regulatory experts.

Throughout June and July, principals of the firm will be providing briefings to clients and friends on these and other regulatory developments, as well on best practices in registering and establishing effective compliance systems.  Locations include London, Hong Kong, Singapore, Tokyo and Geneva.  To reserve a space, please contact info at or phone +86 1391 0413 776                            .

You can download below a presentation on the topics discussed in this article which will be delivered by Mark Berman at the 17th Annual GAIM International conference in Monaco on June 23, 2011.

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