Exempt Reporting Advisers (“ERAs”) must update their SEC registration exemption filings annually within 90 days of their fiscal year end. As such, many ERAs must update their filings by April 1, 2013 due to the holiday weekend and should consider submitting their filings by March 28, 2013.
In addition, ERAs that now manage more than $150 million on behalf of private funds from a U.S. office and that cannot rely on another exemption must register with the SEC. ERAs that have complied with their SEC reporting obligations have up to 90 days after filing their annual updating amendment to apply for SEC registration. As such, ERAs that must transition to SEC registration should submit their applications by June 28, 2013 due to the fact that June 29, 2013 is a Saturday.
ERAs and unregistered foreign private advisers should review their advisory activities for changes that could trigger registration requirements. For example, an ERA that no longer qualifies for an exemption because it raised a new fund that is not a venture capital fund and that cannot rely on another exemption must register. The term “venture capital fund” is narrowly defined by the SEC, and an ERA raising new funds must consider whether it will remain exempt from registration. Similarly, an ERA that has a U.S. office and begins managing a separate account for a U.S. client must register prior to serving as investment adviser to such account. In addition, foreign private advisers that have a place of business in the U.S., 15 or more clients and private fund investors in the U.S., or more than $25 million under management on behalf of clients and private fund investors in the U.S., or that publicly advertise their investment advisory services in the U.S. may have to register.
As a final reminder, regardless of registration status, all investment advisers should consider formalizing their compliance policies and procedures as a matter of best practice. This can help advisers prevent inadvertent violations of federal securities laws and meet institutional investors’ ever-increasing expectations. All investment advisers should consider maintaining written policies and procedures to prevent violations of insider trading, pay-to-play, and anti-bribery laws, as well as to address personal account dealing. An SEC-registered investment adviser must maintain comprehensive, written policies and procedures tailored to its business activities and compliance risks. Also, as discussed in our November 28, 2012 alert, foreign registered investment advisers should take steps to ensure they are prepared for an SEC examination.
ACA employs the largest team of former SEC examiners and in-house compliance professionals around the globe to assist firms in meeting SEC registration and reporting obligations. ACA is headquartered in New York City and has offices throughout the United States. In addition, ACA has former SEC examiners based in its London and soon-to-open Hong Kong offices to serve ERAs and SEC-registered investment advisers across Europe and Asia.