The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 has dominated the discussion of US regulatory requirements. During Q1 2012, thousands of private fund managers that were previously exempt had to register with the SEC or file as Exempt Reporting Advisers. But there are significant developments beyond Dodd-Frank. One major change involves new registration and oversight by the US Commodity Futures Trading Commission (CFTC).
Since 2003, many hedge fund managers have relied on an exemption from registration as a commodity pool operator (CPO) available where only “qualified eligible persons” invested in the fund, a category that includes “qualified purchaser” investors in funds offered pursuant to Section 3(c)(7) of the Investment Company Act. This exemption — under 4.13(a)(4) — was rescinded by the CFTC in final rules adopted in February. With the exemption gone, fund managers that trade any “commodity interests” will need to find another exemption, or register with the CFTC. Many managers are looking to the “de minimus” exemption under Rule 4.13(a)(3).
Click here to read our column that appeared in HFMWeek discussing U.S. regulation of private fund managers, beyond Dodd-Frank.