Thursday, January 12, 2012

Indiana Issues Private Equity/Venture Capital Fund Administrative Order In Connection with IA Registration

An administrative order by the Indiana Securities Division extends a 2008 policy statement on private equity/venture capital funds and investment adviser registration by providing a post-Dodd-Frank Act IA registration exemption for the funds following that Act's elimination of the Section 203(b)(3) de minimis exemption for investment advisers.

Effective January 9, 2012 and until the Division can adopt a rule for these funds, no enforcement action will be taken against any person that fails to register in the State as either an investment adviser or investment adviser representative, provided: (1) the person maintains a place of business in Indiana; (2) has had not more than five client residents of Indiana during the preceding 12 months; (3) does not hold itself out generally to the public as an investment adviser; and (4) advises a qualified fund as defined under SEC Rule 203(m)-1, if neither the fund's adviser nor any of the adviser's affiliates are subject to federal Regulation A "bad boy" disqualification provisions.

NOTE that fund advisers described in (4) above who advise at least one qualifying private fund excluded from the "investment company" definition in Section 3(c)(1) of the Investment Company Act of 1940 that are not venture capital funds must meet additional requirements.