In the aftermath of the 2007-2008 global financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)1 was passed into law and hailed as the most comprehensive financial reform in generations.2 The changes have affected almost every element of the financial services world. Dodd-Frank’s Title IV, the "Private Fund Investment Adviser Registration Act of 2010" (Title IV), is the source of regulatory change for investment advisers. Title IV reallocates regulatory responsibilities between the federal government and the states, and brings a significant additional number of investment advisers into the regulatory ambit. The new regulations also impose significantly expanded disclosure requirements on investment advisers. This article will focus on the new regulatory division between federal and state regulators and on the expanded reach of registration requirements.
The Investment Advisers Act of 1940 (the Advisers Act) defines an investment adviser as a person who engages in the business of advising others, for compensation, regarding the value of securities and whether or not to invest, purchase or sell securities.3 Investment advisers conducting business in the United States are, in the absence of an exemption, required to register with the Securities and Exchange Commission unless the investment adviser’s assets under management (AUM)4 are below the jurisdictional threshold for federal regulation.
