An ERA is an investment adviser that must pay fees and report public information via the IARD/FINRA system but is not required to register as an adviser with the Securities and Exchange Commission (SEC) or with state regulators. There are two exemptions that advisers can use to claim ERA status: the Private Fund Adviser Exemption or the Venture Capital Fund Adviser Exemption.
have assets under management attributable of less than $150 million.
Only assets managed from the U.S. are counted toward the $150 million limit; non-U.S. advisers must ensure that all U.S. clients are solely private funds.
Advisers relying on this exemption are required to calculate annually the amount of private fund assets they have under management and report these amounts in the adviser's annual amendments to its Form ADV. Advisers reporting $150 million or more of private fund assets under management no longer qualify for the private fund adviser exemption and must register under the Advisers Act unless they qualify for another exemption from registration.
Generally, an adviser that advises solely venture capital funds can qualify for the federal venture capital adviser exemption. Unlike the private fund adviser exemption, the level of AUM does not affect an adviser's use of the venture capital adviser exemption.
not be registered under the Investment Company Act and not have elected to be treated as a business development company.
any equity security issued by a company of which a qualifying portfolio company is a majority-owned subsidiary, or a predecessor, and that is acquired by the fund in exchange for directly acquired equity described above.
If an adviser plans on relying on either exemption, it must complete its ERA filing within 60 days of claiming the exemption. The applicable date is typically the date on which the firm begins an advisory relationship with its first firm.
If either exemption will become inapplicable due to the adviser taking on separately managed accounts (SMAs), the adviser must promptly register with the whichever regulatory agency is appropriate (SEC or state) prior to taking on its first SMA.
This entry was posted in Exempt Reporting Adviser, Registered Investment Advisers and tagged Dodd-Frank Act, Exempt Reporting Adviser, Federal ERA, Form ADV, Investment Advisers Act of 1940, Private Fund Adviser Exemption, Registered Investment Advisers, SEC ERA Registration, State ERA Registration, Venture Capital Fund Adviser Exemption. Bookmark the permalink.