SEC Considering Hedge Fund and PE Firm Registration Extension

Date: Tuesday, April 12, 2011
Author: Ricardo Kaulessar, HedgeFund.net

The Securities and Exchange Commission is considering giving hedge fund and private equity firms additional time to register to be in compliance with the Dodd-Frank financial reform law.

Robert Plaze, the associate director of the SEC’s division of investment management, said in a letter Friday addressed to David Massey, president of the North American Securities Administrators Association (NASAA), that the SEC is considering a grace period until the first quarter of 2012 for hedge funds and private equity firms to register.

In the letter, Plaze said the reason for the extension was that although final rules regarding registration would be issued by the SEC on July 21, the firms would likely need additional time to come "fully into compliance."

Private investment firms with assets of more than $150 million will be required to register under the new provision.

One of the complicating issues of the new regulatory regime, is for firms that come in under the SEC limit. Those firms would now be subject to state regulation, which could vary, depending on the state.

Plaze told HedgeFund.net that the deadline extension is to allow firms to see if the rules apply to them when they are issued in July. But he also said there was an upside to the possible delay.

"I got a lot of e-mails saying 'thank you'," Plaze said about the firms' response to the news about the deadline extension.

Massey told HedgeFund.net, "I was a little bit surprised [by the SEC letter], but was kind of expecting it." "I have heard discussion about some unexpected complications in the software used for registration," Massey said.

Go to SEC Letter