Private Advisers

The Virginia State Corporation Commission (Securities and Retail Franchising Division) yesterday adopted a policy statement providing guidance to advisers to private funds in light of the June 22, 2011 adoption of final rules adopted by the Securities and Exchange Commission. Specifically, the Virginia statement recognizes and addresses the “regulatory gap” created by the SEC Rule 203-1(e), which grants an extension to March 30 2012 for private advisers formerly exempt from registration under Investment Adviser Act Section 203(b)(3), which was repealed by Dodd-Frank, to register with the SEC.

As a consequence of Dodd-Frank, Virginia’s Rule 21 VAC 5-80-210A.7, which excludes from the definition of “investment advisers” certain advisers exempt under Section 203(b)(3) of the Investment Adviser Act, becomes a nullity on July 21, 2011. In the absence of the policy statement, the effect of this would be to require private advisers subject to Virginia registration requirements, and that have no other basis for exemption, to register in Virginia as investment advisers by July 22, 2011.
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The Florida Office of Financial Regulation (OFR) issued a press release this week encouraging all federal covered investment advisers with less than $100 million under management to consider dually registering with OFR and the SEC, and to initiate OFR registration as soon as possible. Dual registration would allow the investment adviser to continue as a federal covered adviser while Florida reviews the firm’s application. Upon being approved by OFR, the firm can then withdraw its SEC registration after July 21, 2011.

Florida’s recommendation was prompted by the time it takes to renew and approve applications. Early application increases a firm’s chance of being approved prior to July 21.
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Articles Tagged with Private Advisers

Virginia Adopts Private Adviser Policy Statement

Florida Urges Dual Registration for RIAs Required to Switch