The Securities and Exchange Commission on July 14 voted to propose Rule 203(b)(3)-2 under the Investment Advisers Act of 1940, which would in effect require hedge fund managers with more than $25 million under management to register with the SEC as investment advisers.

Certain amendments to the performance recordkeeping, performance fee and custody rules were also proposed to facilitate the transition for hedge fund managers to the Advisers Act regulatory regime. Most significantly, the amendment to the custody rule would extend from 120 to 180 days the period within which advisers to pooled vehicles could provide financial statements to investors and avoid the quarterly reporting and surprise audit requirements under that rule.