Advisories

SEC Adopts Hedge Fund Adviser Registration Proposal

October 2004

At an open meeting this week, the Securities and Exchange Commission voted to adopt rules that will have the effect of requiring a hedge fund manager with $25 million or more of assets under management and 15 or more investors in funds it manages to register with the SEC as an investment adviser under the Investment Advisers Act of 1940 ("Advisers Act"). The adoption of new Rule 203(b)(3)-2 means that an investment adviser to a "private fund" must count each investor in the fund, rather than the fund itself, as a client for Advisers Act registration purposes.