California To Require Pooled Investment Vehicle Managers To Register As Investment Advisers And Also Proposes Changes In Its Books And Records Rules And Reporting Requirements For Broker-Dealers And Investment Advisers.

Mondaq Business Briefing › Nbr. 2007, January 2007

Position:: California Corporate Securities Law of 1968

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California Corporate Securities Law of 1968

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California To Require Pooled Investment Vehicle Managers To Register As Investment Advisers And Also Proposes Changes In Its Books And Records Rules And Reporting Requirements For Broker-Dealers And Investment Advisers.

A. The Investment Adviser Registration Amendment

The California Department of Corporations (the "Department") recently announced plans to delete an exemption from registration for certain investment advisers that has been on the books since 2002. The proposed rule change is aimed at California hedge fund advisers, but other investment advisers to pooled investment vehicles may be affected as well. Private equity managers in particular also may be required to register with the Department as investment advisers if the funds they manage do not meet California's definition of a venture capital company.

The Department plans to amend California Corporate Securities Law of 1968 ("CSL") Rule 260.204.9 to limit the adviser registration exemption established therein solely to advisers who work for "venture capital companies" (the "Proposed Amendment"). The Proposed Amendment would require any other person who meets California's definition of an "investment adviser" to register...

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