Compliance Solutions for Investment Advisers

New Massachusetts Regulations

The Massachusetts Securities Division recently adopted new regulations related to investment advisers.  The new regulations became effective February 3, 2012.  The rules will generally not be enforced until August 3, 2012.  The changes to the regulations did the following:

Discretion (950 CMR 12.205)(5): Changed the minimum financial requirements relating to an adviser with discretion over client assets.

Custody (950 CMR 12.205)(5): Removed the minimum financial requirements relating to an adviser with custody.  Instead, an adviser with custody of client assets must comply with the safekeeping requirements outlined in Adviser’s Act Rule 206(4)-2.

Change in registration requirements (950 CMR 12.205(1)&(2)): The regulations change the definition of “institutional buyer” found in the regulations.  This definition was traditionally used by advisers to pooled investment vehicles.  As a result of changes, more investment advisers to pooled vehicles may be required to register or claim another applicable exemption or exclusion.  The Division has also introduced a new conditional private fund exemption to exempt from registration certain advisers to one or more “private funds.”

 

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