CHICAGO, Sept. 7, 2010 – The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) is changing the financial service landscape. The Act addresses four major issues: transparency, risk management, accountability and structural oversight; and will create new regulators, bring new firms and markets under regulatory oversight, and provide new rulemaking and enforcement powers to regulators.
Grant Thornton LLP’s Financial Service practice has created a paper — Financial reform: What private fund advisers need to know about the Dodd-Frank Act —that provides a summary of the various rulemakings of the Act that apply to hedge funds, private equity funds and their advisers, their effective dates, expected impact and actions required.
Registered investment advisers, especially those with large amounts of assets under management and who engage in derivatives and other high-risk activities, will face increased regulation and scrutiny — namely, registration and examination by the SEC. Funds that are classified as “major swap participants” (i.e., funds that maintain substantial positions in swaps), may be required to register with either the SEC or the Commodity Futures Trading Commission (CFTC) or possibly both regulators. The CFTC is expected to place stringent regulation on fund advisers, particularly those managing funds classified as “commodity pool operators.” In addition, even some smaller funds may be required to register.
“Advisers and funds should be prepared for the enhanced disclosure and reporting requirements that come with the new regulations,” noted Jack Katz, national managing partner of Grant Thornton’s Financial Services practice. “These potential rules — and those yet to be determined — could have a significant impact on hedge funds, private equity funds and their advisers.”
Some of the issues covered in the paper include:
Download a full copy of Financial reform: What private fund advisers need to know about the Dodd-Frank Act.
Many of the specific rules of the Act have yet to be shaped by regulators, and firms must stay informed. To help companies navigate this uncharted territory, Grant Thornton LLP has created the Financial Regulatory Reform Resource Center. For more information about the legislation and emerging issues from the legislation, visit www.GrantThornton.com/financialreform.
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