SAN FRANCISCO (HEDGECO.NET) – On October 26, 2004, the Securities and Exchange Commission (the �SEC�) voted to approve rule 203(b)(3)-(2) and conforming amendments under the Investment Advisers Actof 1940, as amended (the �Advisers Act�), that will require most hedge fund advisers to register with the SEC under the Advisers Act. Rule 203(b)(3)-(2) and the conforming amendments will becomeeffective February 1, 2006.

Promulgation of the new rule and related amendments has drawn significant criticism from within the SEC and from other government officials and departments, academics, and industry observers and participants. The final rule, like the proposed rule, was approved by a 3-to-2 vote of the SEC Commissioners. Such split votes on rule-making matters are extremely unusual.

A memorandum explaining the specific provisions of the final rule, the differences from the rule in its proposed form, and important transitional considerations will be distributed shortly by White & Case LLP. Items of interest include:

� A lengthy period before the rule and conforming amendments become effective;

� The formation of a task force created with the mandate to develop a risk based examination program;

� Key transitional considerations [and rule relaxations] for determining which private funds must be looked-through for client counting purposes and for applying the record keeping requirements under the Advisers Act; and

� The exclusion of executives, partners and other key employees of an investment adviser, and their investment assets, from the definition of �client� and �assets under management� respectively for the purpose of requiring registration under the Advisers Act.

If you have questions or comments regarding this Update, please contact one of the following lawyers:

David A. Goldstein
212 819 8757
dgoldstein@whitecase.com

Jay B. Gould
415 544 1112
jgould@whitecase.com