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California’s Private Fund Adviser Exemption

Before the enactment of the Dodd-Frank Act in 2010, many advisers to alternative investment vehicles, such as hedge funds, private-equity funds, and venture capital funds relied on the Section 203(b)(3) exemption from registration under the federal Investment Advisers Act.  In California, investment advisers exempt under Section 203(b)(3) had a corollary temporary exemption from California investment…

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

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…

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Rule 260.204.9 – “What is to be Done?”

As I mentioned in this earlier post, California has its own definition of “venture capital company” in Rule 260.204.9.  This rule is an exemption from the investment adviser registration requirement in Corporations Code Section 25230 if a person meets the following conditions: Does not hold itself out generally to the public as an investment adviser; Has fewer than…

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What is a Venture Capital Fund?

Section 407 of the Dodd-Frank Wall Street Reform and Consumer Protection Act creates a new exemption from federal registration for investment advisers if all their investment advice is limited to one or more “venture capital funds”.  Congress, however, did not say what a “venture capital fund” was.  Rather, Congress told the Securities and Exchange Commission…

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