DFR adopts NASAA exemption for investment advisers to private funds

Dale Schaft, Information Management Officer, 802-828-4872
11/02/2012 (All day)

MONTPELIER – Steve Kimbell, commissioner of the Vermont Department of Financial Regulation, has issued an order adopting the North America Securities Administrators Association (NASAA) model rule exemption for investment advisers to private funds. The new order, effective Nov. 12, 2012, provides for an exemption from registration for “private fund advisers,” which is any investment adviser who provides advice solely to one or more private funds (i.e. a 3(c)(1) fund or a 3(c)(7) fund).

 A private fund adviser must not be subject to disqualification from prior bad acts such as fraud or other securities law violations. The private fund adviser must also make the same Form ADV filings as an exempt reporting adviser would.


Any private fund adviser that advises one or more 3(c)(1) funds (other than venture capital funds or 3(c)(7) funds, as defined under federal regulations) must also comply with additional restrictions. Fund managers registered with the Securities and Exchange Commission will be required to make applicable notice filings to the Commissioner even if they would otherwise qualify for the private fund adviser exemption.

The new rule also provides grandfathering provisions for fund managers of funds that existed before Nov. 12, 2012, but cease accepting non-qualified clients after the date, as long as the fund manager does comply with the disclosure and audit requirements of the new exemption.