SEC Proposing to Amend the Investment Advisers Act

In December 2015, the Fixing America’s Surface Transportation Act (the “FAST Act”) was signed into law by President Obama.  Among other things, sections 74001 and 74002 of the FAST Act amended two provisions of the Investment Advisers Act of 1940 (the “Advisers Act”):

  • An adviser whose only clients were rule 203(l)-1 venture capital funds and deemed to be “small business investment companies” (“SBICs”) can rely on the venture capital fund adviser exemption; and
  • An adviser solely to “private funds” with assets under management in the United States of less than $150 million attributable to its non-SBIC private fund clients could now rely on the private fund adviser exemption regardless of the assets under management in the United States attributable to its SBIC client(s).

On May 3, 2017, the SEC proposed a rulethat would amend the definition of a venture capital fund (rule 203( l)-1) and the private fund adviser exemption (rule 203(m)-1) under the Investment Advisers Act of 1940 to reflect the changes previously made by the FAST Act.  With the latter amendment, the definition of “assets under management” in the private fund adviser exemption would exclude the assets of “small business investment companies.”  In doing so, these assets would not be counted towards the $150 million threshold that, once reached, would require investment advisers to be registered.Comments on the proposed rule amendments are due on or before June 8, 2017, and can be submitted electronically via the Commission’s Internet comment formor by sending an email to [email protected] with the subject heading “File No. S7-05-17.”  Paper comments can be mailed to “Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090.”If you would like JLG to submit a comment on your behalf or if you have questions or would like more information on how the SEC’s proposed amendments to the Investment Advisers Act will impact your business, please contact us at (619) 298-2880, or email Thank you.  

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