Are hedge funds registered with the Securities and Exchange Commission (SEC)?

Hedge funds with regulatory assets under management in excess of $100 million are required to register with the U.S. Securities and Exchange Commission (SEC). Advisors who have regulatory capital under management between $100 million and $150 million and qualify for the private fund advisor exemption do not have to register with the SEC.

After 2011, the Dodd-Frank Act raised the lower limit for hedge funds advisors to register with the SEC to $100 million and also defined a new category of advisors, called mid-sized advisors, who have regulatory assets under management between $25 million and $100 million. An advisor of a mid-sized hedge fund does not have to register with the SEC if he is registered with the state where his principal office is located. However, an advisor of a mid-sized hedge fund is required to register with the SEC if his home state has inadequate regulation and he does not have the private fund advisor exemption. 

A hedge fund advisor may avoid registration with the SEC if he qualifies for the private fund advisor exemption under the Dodd-Frank Act. This exemption is applicable to an advisor of a hedge fund who has principal offices located in the United States, has regulatory assets under management below $150 million, and only has private fund clients. If a hedge fund advisor has at least one non-private fund client, he is not eligible for the private fund advisor exemption. Also, all assets count towards the $150 million ceiling, including assets managed outside of the United States.

(For related reading, see "Evaluating Hedge Fund Performance.")