[ by Howard Haykin ]

A new tranche of Private Fund Advisers – those managing hedge funds and other private funds – have stepped to the plate and registered with the SEC since the Dodd-Frank Reform Act mandated such registration.  All told, 1,504 advisers have registered since passage of the Dodd-Frank Reform Act - which mandated such registrations. 

That means that there currently are 4,061 Private Fund Advisers who have registered with the SEC, when we combine the new registrations with the 2,557 advisers who had registered earlier on a voluntary basis. 

SEC Chairman Mary Schapiro noted that “prior to the Dodd-Frank Act, regulators only saw a slice of the pie but didn’t know how big the pie even was.  The law enables regulators to better protect investors by providing a more comprehensive view of who’s out there and what they’re doing.”

All Adviser Registered with the SEC. A total of 11,002 investment advisers now are SEC-registered.  Of those, 37% advise hedge funds and other private funds.  Assets under management (or AUM) at SEC-registered advisers is up about $5.7 trillion, or 13%, even though the number of advisers fell about 15% as the Dodd-Frank Act required mid-sized advisers to move from federal to state oversight.

Norm Champ, Director of the SEC's investment Management Division notes:  "Registration of private fund advisers requires these important market participants to comply with the Advisers Act and SEC rules.  The SEC, in turn, has the authority now to conduct on-site examinations and enables the SEC to review each examination and arms the SEC with the authority to examine their operations. 

After all, “advisers are not just required to file a registration form, they also must take steps to ensure they are acting as fiduciaries, including monitoring their activities for conflicts of interest that can harm investors."

National Examination Program. Last week, the SEC launched an initiative to conduct focused, risk-based examinations of newly registered private fund advisers over the next 2 years.

To read about the SEC plans, go to:   ["Dear New Investment Adviser: Welcome to the SEC National Exam Program," 10/10/12] and [ Hedge Fund Advisers: Now That You’re Registered, May 2012].
 

Mid-Sized Advisers. Conversely, Dodd-Frank Reform Act required mid-sized advisers to move their registrations from the federal level to the states by June 28.  So far, over 2,300 mid-sized advisers - those managing under $100 million of assets – have made the transition to state regulation.

The SEC has identified 293 advisers who no longer qualify to register with the SEC because the level of their AUM has dropped below $100 million.  The Commission undertook this effort with extensive coordination and consultation with the state securities authorities.

Advisers identified in the notice have until 12/17/12 to withdraw their SEC registration, or inform the Commission staff that they should remain eligible for registration with the SEC. After that date, the Commission may issue an order cancelling the registration of advisers who have not filed an amendment, withdrawn from registration, or requested a hearing.

Information about registered advisers is available on the Investment Adviser Public Disclosure website at http://www.adviserinfo.sec.gov

[SEC PR 12-214, 10/19/12]