What is the AUM threshold for a fund to register with the SEC?

Posted by Andrew Borowiec on Mar 1, 2018 9:00:00 AM

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You asked and we answered. For our first blog in our Ask an Expert series: What is the AUM threshold for a SEC registration? It might not be what you think it is.

This applies to any fund relying on 3c1 or 3c7.

The law is and has been since Dodd Frank that SEC registration is required at $100M (unless the adviser is in NY, in which case the obligation to register kicks in at $25M). Note that all dollar amounts I refer to are gross (inclusive of borrowed amounts and proprietary capital). Once there is an obligation to register, there is an exemption available to an adviser that only manages private funds (i.e., no managed accounts) and has less than $150M under management. This is an exemption that must be filed for - the filer becomes an exempt reporting adviser. This is why many believe that the registration requirement kicks in at $150M.

The proper analysis (assuming the adviser would like to remain unregistered) is:

Does the manager have $100M (or $25M if in NY)?

  • No - look at state law and determine if registration is required in one or more state. If an adviser is in any state other than NY and has more than $25M under management and qualifies for an exemption from registration in the state that it wants to take advantage of (as opposed to registering in that state), then the adviser goes through the same analysis as if the answer were Yes.
  • Yes - Does the investor have $150M gross or less under management and provide services solely to funds (no managed accounts)?
  • No - register with the SEC
  • Yes - Apply for exemption from registration as an ERA. If the ERA ends the year with more than $150M, it will have to convert its exemption to a registration. The ERA may not accept a mandate form a managed account unless it registers first.
Answer provided by:
Ricardo Davidovich
Partner
Haynes and Boone, LLP
30 Rockefeller Plaza
26th Floor
New York, NY 10112
ricardo.davidovich@haynesboone.com
(t) 212.835.4837

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