Advisories

Hedge Fund Managers Planning To Register As Advisers Have Compliance Obligations Starting This February

February 2005

Hedge fund managers who anticipate registering with the Securities and Exchange Commission as investment advisers by the February 1, 2006, deadline should begin certain aspects of compliance with the Investment Advisers Act of 1940 by February 10 of this year. Specifically, they should:

• begin maintaining records to support the calculation of performance, which are required under Advisers Act Rule 204-2(a)(16), and

• if the manager expects investors to pay performance fees post-registration, accept only "qualified clients," as defined in Rule 205-3 under the Advisers Act