Exempt reporting advisers (“ERAs”) must prepare and file Form ADV Part 1A with the SEC and comply with certain other reporting and recordkeeping requirements under the Investment Advisers Act of 1940 (“Advisers Act”), such as §204A (insider trading prohibitions), §206 (anti-fraud provisions) and Rule 206(4)-5 (pay-to-play rules).

ERAs are investment advisers to hedge funds and private equity funds that avoid full SEC registration by relying on either Rule 203(m)-1 under the Advisers Act (applicable to investment advisers solely to hedge funds and private equity funds with aggregate AUM in the US under $150 million) or Rule 203(l)-1 under the Advisers Act (applicable to investment advisers that solely manage venture capital funds).

Form ADV Part 1A for ERAs became available on November 7, 2011. ERAs are required to complete several items of Part 1A of Form ADV, including providing detailed information regarding each fund advised, and file it with the SEC no later than March 30, 2012. Going forward, an ERA to a newly formed fund should file within 60 days from the date that such fund is formed.

Whether an investment adviser is considered an ERA will depend upon where the investment adviser is located. Connecticut- and California-based investment advisers to hedge funds and private equity funds with AUM under $150 million, and New York-based investment advisers to hedge funds and private equity funds with AUM between $25 million and $150 million, generally will be considered ERAs. Please contact us as soon as possible to determine whether your investment advisory firm will be considered an ERA.

For investment advisers currently registered with the SEC, the transition process to ERA status will include: 1) filing Form ADV-W (select “filing as an ERA” as the reason for withdrawing), and; 2) filing an initial Form ADV Part 1A as an ERA. Existing IARD entitlements will remain valid.

Although the SEC has indicated that ERAs will not be subject to routine examinations by SEC staff, ERAs are subject to SEC examinations for cause, such as when prompted by a tip, a complaint, or a referral from another agency or organization.