In a Guidance Update, staff of the SEC’s Division of Investment Management outlines amendments to the Investment Advisers Act in the recently passed (Dec. 4, 2015) FAST Act, and provided its view on the exemptions now available to advisers to Small Business Investment Companies (SBICs).
In light of the amendments, advisers currently relying on the SBIC adviser exemption (under IAA Section 203(b)(7)) and advising only SBICs may choose to instead: (1) rely on the venture capital fund adviser exemption and advise both SBICs and Rule 203(l)-1 venture capital funds; or (2) rely on the private fund adviser exemption and advise both SBICs and non-SBIC private funds, provided those non-SBIC private funds account for less than $150 million in assets under management.
Unlike advisers relying on the SBIC exemption, advisers that choose one of the above two options would need to submit reports as exempt reporting advisers. Advisers currently relying on the venture capital fund adviser or the private fund adviser exemption may now obtain SBIC clients consistent with the revised exemptions and remain unregistered. Additionally, certain advisers that advise SBICs may be eligible to withdraw their registration and begin reporting as exempt reporting advisers under either of the two exemptions listed above.
Click here to access the Guidance Update.