- 3 -other things, repeals section 203(b)(3) of the Advisers Act.
Section 203(b)(3) exempted anyinvestment adviser from registration if the investment adviser (i) had fewer than 15 clients in thepreceding 12 months, (ii) did not hold itself out to the public as an investment adviser and(iii) did not act as an investment adviser to a registered investment company or a company that
has elected to be a business development company (the ―private adviser exemption‖).
Advisersspecifically exempt under section 203(b) are not subject to reporting or recordkeeping provisionsunder the Advisers Act, and are not subject to examination by our staff.
The primary purpose of Congress in repealing section 203(b)(3) was to require advisers
to ―private funds‖ to register under
the Advisers Act.
Private funds include hedge funds, privateequity funds and other types of pooled investment vehicles that are excluded from the definition
of ―investment company‖ under the Investment Company Act of 1940
In this Release, when we refer to the ―Advisers Act,‖ we refer to the Advisers Act as in effect on
July 21, 2011.
15 U.S.C. 80b-3(b)(3) as in effect before July 21, 2011.
Under section 204(a) of the Advisers Act, the Commission has the authority to require aninvestment adviser to maintain records and provide reports, as well as the authority to examine
such adviser‘s records, unless the adviser is ―specifically exempted‖ from the requirem
ent toregister pursuant to section 203(b) of the Advisers Act. Investment advisers that are exempt fromregistration in reliance on other sections of the Advisers Act (such as sections 203(l) or 203(m)
which we discuss below) are not ―specifically exempted‖ from the requirement to register
pursuant to section 203(b), and thus the Commission has authority under section 204(a) of theAdvisers Act to require those advisers to maintain records and provide reports and has authority
to examine such advisers‘ re
S. Rep. No. 111-176, at 71-
3 (2010) (―S. Rep. No. 111
176‖); H. Rep. No. 111
-517, at 866
(2010) (―H. Rep. No. 111
517‖). H. Rep. No. 111
-517 contains the conference reportaccompanying the version of H.R. 4173 that was debated in conference. While the Senate votedto exempt private equity fund advisers in addition to venture capital fund advisers from therequirement to register under the Advisers Act, the Dodd-Frank Act exempts only venture capitalfund advisers.
Restoring American Financial Stability Act of 2010, S. 3217, 111thCong. § 408 (2010) (as passed by the Senate)
The Wall Street Reform and Consumer
Protection Act of 2009, H.R. 4173, 111th Cong. (2009) (as passed by the House) (―H.R. 4173‖)
Dodd-Frank Act (2010),
15 U.S.C. 80a.