Preliminary Results of Dodd-Frank Act Changes to Investment Adviser Registration Requirements

The Securities and Exchange Commission has released some statistics on the effect of Dodd-Frank on the registration of investment advisers (.pdf). March 30, 2012 was the compliance date for several provisions of the Dodd-Frank Act that amended the registration provisions of the Investment Advisers Act.

Registered private fund advisers advise 30,617 private funds with total assets of $8 trillion, which is 16% of total assets managed by all registered advisers. Approximately 31% of private fund total assets are attributable to advisers that registered since the effective date of the Dodd-Frank Act. Hedge funds (53%) and private equity funds (24%) comprised the majority of private fund assets managed by registered advisers. Real estate funds are in the other 23% along with liquidity funds and venture capital funds.

A total of 1,950 exempt reporting advisers filed Form ADVs with the SEC. 41% are foreign advisers. Exempt reporting advisers account for 6,702 private funds with total assets of $1.5 trillion. Of that mix, 17% are venture capital funds.

There are currently 12,623 advisers registered with the SEC with total assets under management of $48.8 trillion. The SEC expects expects that 2,400 mid-sized advisers will switch to state registration by June 28, 2012, resulting in approximately 10,000 advisers with $48.6 trillion in assets under management registered with the SEC.

Using these projections, the SEC anticipates that the cumulative impact of the Dodd-Frank Act registration changes will be a 25% decrease in the number of advisers registered with the Commission, but a 12% increase in the total assets under management of those registered advisers.