The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") was signed into law by the US President on 21 July, 2010.

Non U.S. investment advisers to private funds may be required to register with the SEC and comply with certain rules and requirements that are applicable only to SEC registered investment advisers. These requirements include rules and provisions relating to performance fee arrangements, custody of client assets, marketing of advisory services and products, disclosures to the SEC, clients and investors on Form ADV, establishment of a compliance program and appointment of a chief compliance officer.

However, the Act exempts certain foreign private advisers from SEC registration and reporting/recordkeeping requirements. To qualify, advisers must meet all of the following criteria:

  • have no place of business in the United States;
  • have fewer than 15 clients and investors in the United States in private funds advised by the adviser at any time;
  • have assets under management attributable to U.S based clients and investors in private funds it advises of less than $25 million or such higher amount as the SEC may, by rule, deem appropriate; and
  • neither hold itself out to the public in the United States as an investment adviser, nor act as a business development company or an investment adviser to a registered investment company.

Accordingly, any non U.S. adviser with more than 14 U.S. clients and U.S. investors in private funds, or that manages $25 million or more of the assets attributable to U.S. clients and U.S. investors, may be required to register with the SEC if they do not qualify for any other exemption.

Our client brochure highlights the potential impact of certain provisions of the Act on non U.S. investment advisers to private funds, in particular the requirement that non U.S. investment advisers who manage assets greater than $25 million attributable to U.S. clients may need to register with the SEC by 21 July, 2011.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.