{"id":16853,"date":"2010-07-23T06:29:55","date_gmt":"2010-07-23T10:29:55","guid":{"rendered":"http:\/\/www.hedgeco.net\/news\/?p=16853"},"modified":"2010-07-23T08:58:08","modified_gmt":"2010-07-23T12:58:08","slug":"implications-impact-of-the-dodd-frank-reform","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/07\/2010\/implications-impact-of-the-dodd-frank-reform.html","title":{"rendered":"Hedge Fund Implications & Impact of the Dodd-Frank Reform"},"content":{"rendered":"

\"\"<\/a>New York (HedgeCo.net) – Hedge funds and private equity funds will be impacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act signed by President Obama, according to Sadis and Goldberg.<\/p>\n

The Dodd-Frank Act includes the Private Fund Investment Advisers Registration Act of 2010, which will require many investment advisers and hedge fund managers to register as investment advisers with the SEC. It also will require some investment advisers and hedge fund managers that are presently registered with the SEC to, instead, register with a state.<\/p>\n

Also revising one of the definitions of an “accredited investor”, the new bill excludes the value of a person’s primary residence from the $1 million net worth calculation. After four years, and at least once every four years thereafter, the SEC is required to review the definition of “accredited investor” for natural persons and determine whether adjustments should be made.<\/p>\n

This change has been made effective immediately.<\/p>\n

“A natural person is generally considered to be accredited if he\/she: (1) has $200,000 in annual income (or $300,000 jointly with a spouse); or (2) a net worth of $1M. ” Law firm Holland and Knight said of the reform.<\/p>\n

Client Impact:<\/strong><\/p>\n

The new “accredited investor” definition may be subject to further interpretation, but as of now appears to not require expulsion, but will limit new investors or additional subscriptions from existing investors.<\/p>\n

Clients acting as advisers to private funds should amend their subscription agreements to comply with the new definition of accredited investor as applied to natural persons each time it’s promulgated by the SEC.<\/p>\n

Implications for Hedge Funds<\/p>\n

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Regarding hedge funds and private equity funds, Deutche Bank said: “The Government Accountability Office (GAO) is to to complete a study on feasibility of forming a self-regulatory organization to oversee private funds and submit a report regarding the same to Congress within 1 year of the date of enactment.”<\/p>\n