Investment Advisor or Investment Adviser?

Even though the federal statute is named the Investment Advisers Act of 1940, persons regulated by that act often refer to themselves as “advisors” and not “advisers”.  Which is spelling is correct? In English, we use both the –er and –or as endings to create agent-nouns.  For example, the verb “create” becomes the agent-noun “creator”.  The question

More Maladroit Drafting From The SEC

Last December, the Securities and Exchange Commission proposed a new exemptive rule under the Investment Company Act of 1940.  The proposed rule would allow mutual funds, exchange-traded funds (“ETFs”), closed-end funds, and companies that have elected to be treated as business development companies (“BDCs”) under the ICA to enter into derivatives transactions and financial commitment transactions notwithstanding

Commissioner Ponders Whether To Exempt Real Estate Brokers From Investment Adviser Registration

Last week, the Commissioner of Business Oversight issued an invitation for comment on whether to exempt real estate brokers from the investment adviser certification requirement under the Corporate Securities Law of 1968.  The exemption would require a real estate broker to be operating under the scope of a license issued by the Bureau of Real

SEC Slays Redwoods At Fearsome Pace

Yesterday, was a big day for both the regulated and the unregulated adviser industry. “The very rich are different from you and me . . . they have more money” The Securities and Exchange Commission adopted its final “family office” rules.  According to the SEC, “family offices” are established by wealthy families to manage their riches,

Commissioner Announces Action To Alleviate Exempt Adviser Uncertainty

This afternoon, Commissioner Preston DuFauchard released this letter regarding the upcoming demise of the federal private adviser exemption (Section 203(b)(3) of the Investment Adviser Act of 1940).  The Commissioner’s letter is in response to concerns about the continued viability of Rule 260.204.9 which explicitly refers to Section 203(b)(3).  Essentially, the Commissioner is announcing that he will be issuing emergency

Guest Post: Are Some California Fund Manager Performance Fees in Doubt?

Matthew J. Ertman

By Matthew J. Ertman The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) repeal of the private adviser exemption could eliminate the ability of some California fund managers to charge performance fees (often referred to as the manager’s carried interest). Effective July 21, 2011, private equity, venture capital and hedge fund managers will

Video: Dodd-Frank Act To Increase State Oversight Of Hedge Fund Advisers

Watch the video

Watch the video In enacting the Dodd-Frank Act, Congress significantly altered the regulatory landscape for hedge fund advisers by eliminating (effective July 21, 2011) the fewer-than-fifteen client exemption from registration pursuant to Section 203(b)(3) of the Investment Advisers Act of 1940.  At the same time, Congress increased the assets under management threshold for registration as an investment adviser

Defining “Venture Capital Fund” Is “No Small Task”

Today, the Securities and Exchange Commission proposed a definition of “venture capital fund” for purposes of the new exemption from investment adviser registration under the Investment Advisers Act of 1940.  This new exemption was created by Section 407 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Congress gave the SEC one year to issue

SEC’s Proposed “Family Office” Rule and Rule 260.204.9

In The Snows of Kilimanjaro, Ernest Hemingway wrote: “‘The very rich are different from you and me.’ And how someone had said to Julian, ‘Yes, they have more money.’”   That is certainly true in the case of the families described in the Securities and Exchange Commission’s recently proposed family office rule. According to the SEC,

Senior-Specific Specifications Can Spell Trouble Under the CSL

Recently, the Securities and Exchange Commission announced that it had charged an investment adviser in Colorado with fraudulently recommending hedge funds to older investors. In California, we have a statute, Corporations Code Section 25234.5, that specifically prohibits broker-dealers and investment advisers, or their respective agents or representatives, from using a senior specific professional designation in