The Securities and Exchange Commission ("SEC") has published rule changes that will require many U.S. and non-U.S. hedge fund advisers to register as investment advisers under the Investment Advisers Act of 1940 (the "Advisers Act"). The principal changes, including amendments to Rule 203(b)(3)-1 and new Rule 203(b)(3)-2 (collectively, the "New Rule"), will require an investment adviser to a "private fund" (as defined under the New Rule) to count each investor in the fund, rather than the fund itself, as a client for Advisers Act registration purposes. This Client Advisory outlines the rule changes and the interpretations as set forth in SEC Release No. IA-2333 (December 2, 2004) (the "Release").