Download PDF Tyler Kirk†Introductory Note The appropriate role of the fiduciary standard in the financial industry has garnered a […]
David Mader: The Dodd-Frank Wall Street Reform and Consumer Protection Act is ambitious and complex legislation designed to significantly transform the way the financial system operates…
William K. Sjostrom, Jr.
Historically, hedge fund advisers have not had to register under the Investment Advisers Act of 1940 (the Advisers Act) because of the private adviser exemption. This exemption applied to an investment adviser who (1) had fewer than fifteen clients during the previous twelve months, (2) did not publicly hold itself out as an investment adviser, and (3) did not advise registered investment companies. Even though a hedge fund routinely has fifteen or more investors, hedge fund advisers were able to meet the fewer than fifteen client requirement because they only had to count as clients the funds they advised (which they were careful to keep at fourteen or fewer) and not individual investors in the funds.
