When does the SEC become a fund manager's regulator?
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It depends on assets under management. Under $100 million, the SEC generally won't register you; your state is the regulator, and many states exempt private fund managers. Many small fund managers still file part of Form ADV with the SEC as exempt reporting advisers, which is public, and anti-fraud rules apply. At $100 million you may register with the SEC, and most advisers must by $110 million. An adviser only to private funds stays exempt until $150 million, then registers with the SEC; after that, states generally take a notice filing.
Everything here is for educational purposes only and is not legal, tax or investment advice, or an offer to buy or sell any security. Laws and thresholds change and depend on your facts, so talk to a qualified attorney before acting.
Key facts
- Under $100 million: generally state regulation, not SEC registration.
- Many states exempt private fund advisers; the conditions vary by state.
- Exempt reporting advisers file parts of Form ADV with the SEC; it's public.
- $100 million: SEC registration allowed; $110 million: generally required unless exempt (Rule 203A-1).
- Advisers only to private funds are exempt from SEC registration below $150 million (Rule 203(m)-1).
- SEC-registered advisers generally make notice filings with states.
Transcript
Founder: I only manage my own fund. When does the SEC actually become my regulator?
Operator: Later than most people think. It's about how much you manage.
Operator: Under $100 million, the SEC generally won't register you. Your state is your regulator, and many states exempt private fund managers.
Founder: So the SEC ignores me?
Operator: Not entirely. Many small fund managers still file part of Form ADV with the SEC, as exempt reporting advisers. It's public, and anti-fraud rules apply.
Operator: At $100 million, you're allowed to register with the SEC. Most advisers have to by $110 million.
Founder: Most?
Operator: If you only advise private funds, you stay exempt until $150 million. Cross that, and you register with the SEC.
Founder: And then my state drops out?
Operator: Mostly. Once you're SEC-registered, states generally just take a notice filing.
Founder: So, when does the SEC...