Alerts

Securities and Exchange Commission Issues Interpretive Guidance

August 11, 2006

On August 10, 2006, the Staff (the "Staff") of the Securities and Exchange Commission (the "Commission") issued interpretive guidance on issues affecting hedge fund advisers that arise as a result of the DC Circuit's decision in Goldstein v. SEC (the "Goldstein decision"). This decision vacated not only the Commission's rules requiring the registration of many hedge fund advisers under the Investment Advisers Act of 1940 (the "Advisers Act"), but also vacated related rule amendments intended to facilitate the ability of newly registered hedge fund advisers to conduct their operations in accordance with the Advisers Act and Commission rules. These rules (the "Hedge Fund Rule") and rule amendments were adopted in Investment Advisers Act Release No. 2333, (December 2, 2004) (the "Adopting Release"). The Staff guidance responds to a letter submitted July 31, 2006 by Paul N. Roth and Jeffrey E. Tabak, the Chair and Vice-Chair of the ABA Subcommittee on Private Investment Entities (the "ABA Letter"), and provides relief both to hedge fund advisers that remain registered with the Commission and to advisers that withdraw their registrations from the Commission by February 1, 2007.