The Securities and Exchange Commission has adopted rules that require advisers to hedge funds and other private funds to register with the SEC, establish new exemptions from SEC registration and reporting requirements for certain advisers, and reallocate regulatory responsibility for advisers between the SEC and states.

The rules adopted by the Commission implement core provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding investment advisers, including those that advise hedge funds.

“These rules will fill a key gap in the regulatory landscape,” says SEC Chairman Mary L Schapiro (pictured). “In particular, our proposal will give the Commission, and the public, insight into hedge fund and other private fund managers who previously conducted their work under the radar and outside the vision of regulators.”

In addition, the Commission amended rules to expand disclosure by investment advisers, particularly about the private funds they manage, and revised the Commission’s pay-to-play rule.

Susan Grafton, formerly with the SEC's division of trading and markets, and now an attorney with Gibson, Dunn & Crutcher's Securities Regulation practice in Washington DC, says: "As a starting point, it’s very helpful to have certainty on the registration deadline for private fund managers. Having helped a number of clients with their draft Form ADVs, we’re eagerly looking forward to reviewing the final rules for interpretative guidance on issues specific to hedge funds and private equity funds. We are also concerned about the costs for venture capital fund advisers, whom the SEC is requiring to report, even though they are exempt from registration."

The rules implement a transitional exemption period so that private advisers, including hedge fund and private equity fund advisers, newly required to register do not have to do so until March 30, 2012. The rules regarding exemptions for venture capital fund and certain private fund advisers are effective July 21, 2011.