Hedge Funds - Hedge Fund Manager Registration - Private Fund Investment Advisers Registration Act of 2009

On July 15, 2009, the Obama Administration proposed the Private Fund Investment Advisers Registration Act of 2009 (Advisers Registration Act). The effect of the Advisers Registration Act would be to require most U.S. investment advisers that advise Section 3(c)(1) and Section 3(c)(7) exempt investment companies to register with the SEC. Such investment advisers would be subject to new record keeping and reporting requirements. The Advisers Registration Act would also grant the SEC broad powers to define technical, trade and other business terms under the Investment Advisers Act of 1940 (Advisers Act) and Investment Company Act of 1940 (Investment Company Act). This could result in the SEC defining the term “client” for purposes of Advisers Act Section 203(b)(3) so as to encompass all fund investors, thereby reversing the Goldstein decision and broadening the SEC's ability to police conduct. In this article, we discuss the Advisers Registration, its relationship to other proposals dealing with investment advisers and investment funds and provide our recommendations with regard to the future of the Advisers Registration Act. In particular, we recommend that Congress provide an exemption for smaller investment advisers for whom the burden of registration and compliance would be too great