Effective July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) eliminates the exemption from federal investment adviser registration which is available to advisers with fewer than 15 clients. In the past, a large number of advisers to venture capital and private equity funds have relied on this exemption, and accordingly, are not currently registered with the SEC.
In place of this exemption, Dodd-Frank includes several new exemptions, including an exemption for advisers solely to venture capital funds (Venture Capital Exemption), and an exemption for advisers solely to private funds with assets under management (AUM) in the United States of less than $150 million (150 Million Exemption). On Nov. 19, 2010, the SEC issued two releases proposing how these new exemptions will work, as well as covering several other matters.
Click here for a summary of the provisions of these releases relating to the Venture Capital Exemption and the 150 Million Exemption from the point of view of an adviser based in the United States that is not currently registered as an investment adviser.