Hedge funds and private equity funds under Dodd-Frank
Produced in partnership with Dwight Smith of Nelson Mullins Riley & Scarborough LLP
Hedge funds and private equity funds under Dodd-Frank

The following Financial Services guidance note Produced in partnership with Dwight Smith of Nelson Mullins Riley & Scarborough LLP provides comprehensive and up to date legal information covering:

  • Hedge funds and private equity funds under Dodd-Frank
  • FSOC oversight
  • SEC oversight
  • Registration requirements
  • Exemptions from registration
  • Duties and obligations of registered private fund advisers
  • Fiduciary duty
  • Section 206 and other SEC rules
  • Contractual requirements
  • Recordkeeping
  • more

Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) brings many hedge funds and private equity funds under federal oversight for the first time. The statute does so not through direct regulation of these funds but through the imposition of registration and reporting requirements on the advisers to these funds—who typically organise the funds as well. The purpose of the new regulatory regime is twofold. The first and probably more important purpose from the Dodd-Frank perspective is to provide information about the private equity fund and hedge fund sector to the Financial Stability Oversight Council (FSOC) to support its assessment of systemic risk. The second purpose is to enable the Securities and Exchange Commission (SEC) to extend its investor protection programs to the activities of the advisers and, indirectly, the funds.

This Practice Note summarises first the oversight functions of the FSOC and the SEC regarding hedge funds and private equity funds and then turns to the substantive registration and reporting requirements, which do not apply identically to hedge funds and private equity funds. It also provides a brief summary of the Volcker Rule, which restricts relationships between banking firms and hedge funds and private equity funds.

FSOC oversight

Dodd-Frank created the FSOC to evaluate risks that the financial services industry presents to US