This Memorandum is intended to remind you of certain annual requirements and is divided into four sections. All investment advisers (whether or not registered) should review Section I. In addition to Section I, certain advisers should also review additional sections as follows: exempt reporting advisers should also review Section II, registered advisers should also review Sections II and III, and advisers to private equity and venture capital funds should also review Section IV. This Memorandum does not address annual requirements imposed at the state level.

I. Requirements Applicable to All Advisers

A. Securities Exchange Act of 1934 Filings.

1. Schedule 13G, Schedule 13D and Section 16 Filings.  The annual filing due date for amendments to Schedule 13G is Tuesday, February 14, 2012. It should be noted that in addition to this annual filing amendment obligation, investment advisers may also have initial filing or amendment obligations throughout the year relating to Schedule 13G, Schedule 13D and Section 16 filings.
2. Form 13F.  The quarterly filing due dates for Form 13F are Tuesday, February 14, 2012 for the fourth quarter of 2011, May 15, 2012 for the first quarter of 2012, August 14, 2012 for the second quarter of 2012 and November 14, 2012 for the third quarter of 2012.
3. Form 13H.  The annual filing due date for amendments to Form 13H is 45 days after the end of each full calendar year; therefore, for advisers that initially filed Form 13H in 2011, an initial annual amendment filing will not be due until February 2013. It should be noted that in addition to this annual filing amendment obligation, advisers may also have amendment obligations throughout the year.

B. Privacy Policy.  Each investment adviser is required to provide its clients with an annual privacy notice describing the adviser’s policies regarding its disclosure of clients’ non-public personal information. The annual notice must be provided at least once in any period of 12 consecutive months. The privacy notice must disclose the types of information the adviser collects and shares with others and the procedures the adviser has implemented to safeguard that information. If an adviser discloses nonpublic personal information about its clients to third parties (other than to affiliates and certain service providers), the adviser must also provide an “opt-out” notice, giving the client the opportunity to request that the adviser not disclose the information to such third parties. While the Securities and Exchange Commission (the “SEC”) does not mandate use of its model privacy notice adopted in 2011 (the “Model Form”), the SEC does provide a safe harbor for an adviser that uses the Model Form to meet its disclosure obligations under Regulation S-P. Accordingly, an investment adviser who has not already done so should review its existing privacy notice as well as the Model Form prior to sending out its annual privacy notice for 2012. In particular, an adviser should consider whether it wishes to begin using the Model Form or otherwise make changes to its existing form of privacy notice in light of the Model Form.

C. New Issue Eligibility.  An investment adviser should consider obtaining an annual verification of each client’s new issue eligibility status which should cover both “restricted person” and “covered person” status.

D. Contractual Obligations.  Many counterparty agreements, investor side letters and other documents executed by private funds or investment advisers contain periodic notice, reporting or other requirements. We recommend that an adviser review all such documents carefully and comply as necessary.

E. ERISA Disclosure.  An investment adviser may be required to provide its ERISA plan clients and investors with certain information relating to ERISA plan assets managed by an investment adviser or invested in an investment adviser’s funds, whether or not the fund is subject to ERISA. This information includes the direct and indirect compensation received with respect to those assets in order to enable ERISA plan clients and investors to file their annual Form 5500 with the Department of Labor (“DOL”). Our client alert entitled “U.S. Department of Labor Form 5500 Schedule C Disclosure” explains these reporting obligations and provides model responses an investment adviser can use to meet its ERISA clients’ reporting needs.

F. Private Offering Exemption Filings.

1. SEC Form D.  An annual amendment to a private fund’s Form D filing must be made electronically with the SEC for each private fund which (i) relies upon Rule 506 under Regulation D of the Securities Act of 1933 as a “safe harbor” under the Act’s Section 4(2) private offering exemption from securities registration and (ii) makes a continuous offering. In addition to the annual amendment, updates to such filings may be required if there are material changes to the information included in a filing, e.g., the name or address of the issuer. A fund’s annual amendment is due on or before the anniversary of its initial SEC Form D filing, or if an amendment has been made to its initial filing, on or before the anniversary of the most recently filed amendment. We recommend that investment advisers promptly notify us of all sales and material changes so that we can prepare and make the appropriate filings within the required timeframe.
2. State Blue Sky Notice Filings.  A state blue sky notice filing is generally a one-time filing made at the time of the first sale by a private fund (whether a U.S. or non-U.S. private fund) in a state to any U.S. taxable or U.S. tax-exempt investor. There are, however, certain states that have an annual renewal requirement. In addition, updates to state blue sky filings may be required if there are material changes to the information included in a filing, e.g., the name or address of the issuer. We recommend that an investment adviser inform us, within 3 calendar days of a subscription, of all sales that have taken place in any state as the initial filing with a particular state is required to be made within 15 calendar days of the first sale by a fund in that state. Many states impose substantial penalties for late filings. Filings generally consist of a filing fee, a copy of the fund’s SEC Form D and, in some cases, a consent to service of process on Form U-2.

II. Requirements Applicable to SEC Registered Advisers and Exempt Reporting Advisers

A. Form ADV Annual Amendment and Delivery.  In addition to any interim required amendments, each registered investment adviser and each exempt reporting adviser¹ must update its Form ADV within 90 days of its fiscal year end. For an adviser with a fiscal year ending December 31, the annual updating amendment must be completed by March 30, 2012. Amendments to Form ADV Part 1 must be made on the new Part 1A issued by the SEC in November 2011. Each registered investment adviser and exempt reporting adviser must file all amendments to Part 1A of Form ADV with the SEC electronically through the IARD. In addition, each registered investment adviser must file all amendments to Part 2A of Form ADV (the “brochure”) with the SEC electronically through the IARD and also deliver Part 2A (or provide a summary of material changes to Part 2A with an offer to provide the Part 2A) to its advisory clients. While Part 2B (the “brochure supplement”) is not required to be filed electronically, a registered investment adviser must complete and deliver one or more “brochure supplement[s]” to its advisory clients. We recommend that a registered adviser whose clients are private investment funds deliver its “brochure” and “brochure supplements” to all investors in the funds, as appropriate. An adviser must deposit the appropriate filing fee into its IARD financial account prior to submitting any filing.

B. State Filings.  A registered investment advisers and an exempt reporting adviser may be required to make a state notice filing in any state in which an adviser has a specified number of clients. Notice filings may be made on Form ADV by checking the relevant box in Part 1A and depositing the appropriate state fee(s) into the adviser’s IARD financial account. Further, an exempt reporting adviser may be required to register as an investment adviser in a particular state. As notice filing and investment adviser registration requirements differ from state to state, each adviser should check the requirements for any relevant state in which it operates or has clients (or investors, in certain circumstances).

III. Requirements Applicable to SEC Registered Advisers

A. Compliance Policies and Procedures.  Each registered adviser is required to perform an annual review of its compliance policies and procedures. The annual review must assess the adequacy of the compliance policies and procedures and the effectiveness of their implementation. The SEC has indicated that, in conducting its annual review, a registered adviser should consider any compliance matters that arose during the previous year, any changes in the business activities of the adviser or its affiliates, and any changes in the Investment Advisers Act of 1940, as amended, or applicable regulations that may suggest a need to revise the policies and procedures. In determining the adequacy of an annual review, the SEC has indicated that it will consider a number of factors, including: the persons conducting the review, the scope and duration of the review and the adviser’s findings and recommendations resulting from the review.

We recommend that an adviser document the findings and recommendations resulting from the review. Upon completion of the annual review, the adviser’s compliance manual should be updated to reflect suggested improvements and/or regulatory changes. In connection with the annual review, each registered adviser should perform all other annual reviews required by its compliance manual such as a review of its business continuity and disaster recovery plan.

B. Audited Financial Statements/Surprise Exams.  A registered adviser that has custody of a private investment fund’s client assets may satisfy its obligations under the custody rule by providing audited financial statements of the fund to investors in the private investment fund within 120 days after the end of the pool’s fiscal year (180 days under SEC staff guidance in the case of a fund of funds and 260 days in the case of a fund of fund-of-funds). The financial statements must be prepared in accordance with U.S. generally accepted accounting principles by an independent public accountant registered with, and subject to regular inspection by, the Public Company Accounting Oversight Board. For a private investment fund with a fiscal year that ends December 31, the annual audited financial statements must be sent to investors by April 29 of the following year (June 30 for funds of funds). A registered adviser that is deemed to have custody of client funds and securities must engage an independent public accountant to verify by actual examination (surprise exam) at least once each calendar year such client accounts; provided, however, that if such client accounts are private funds that provide investors with audited financial statements (in accordance with the discussion above), the adviser does not have to comply with the surprise exam requirement.

C. Form PF.  A registered adviser with at least $150 million in regulatory assets under management attributable to private funds (each, a “Reporting Adviser”) must periodically file Form PF through the IARD. The implementation of Form PF is a joint effort between the SEC and the Commodity Futures Trading Commission. The level and frequency of an adviser’s Form PF reporting will vary depending on the amount and type of private fund regulatory assets managed by such adviser. Certain advisers will be required to file Form PF on a quarterly basis within 60 days after the end of each fiscal quarter whereas other advisers will be required to file Form PF on an annual basis within 120 calendar days after the end of each fiscal year. Implementation of Form PF will be phased-in over two stages. The initial Form PF compliance date for Reporting Advisers with at least (i) $5 billion in regulatory assets under management attributable to hedge funds or (ii) $5 billion in regulatory assets under management attributable to private equity funds is June 15, 2012. The initial filing will be due (i) 120 days after the end of the first fiscal year occurring on or after June 15, 2012 for private equity advisers and (ii) 60 days after the end of the first fiscal year or quarter, as applicable, occurring on or after June 15, 2012 for hedge fund advisers. For all other Reporting Advisers, the initial compliance date is December 15, 2012; therefore, most filings will not be required until at least March 2013.

D. ERISA Disclosure.  Investment advisers running separate accounts for ERISA plan clients or managing ERISA plan asset funds will be required to provide their ERISA plan clients with disclosures of the direct and indirect compensation received with respect to plan assets in order to enable the fiduciaries of their ERISA plan clients to continue to rely upon the “reasonable services” exemption to ERISA’s prohibited transaction provisions under Section 408(b)(2). Currently, the new rules are to be effective April 1, 2012; however, it is expected that the final regulations will be issued this week, and the effective date will be further delayed. Once the final 408(b)(2) regulations are issued we will issue a memorandum describing the impact of the new rules on investment advisers.

IV. Requirements Applicable to Private Equity and Venture Capital Fund Advisers

A. VCOC/REOC Certifications.  In the Limited Partnership Agreement of a fund that operates as a “venture capital operating company” (“VCOC”) or a “real estate operating company” (“REOC”) under ERISA, the general partner has usually agreed to deliver to ERISA investors an annual certification regarding the fund’s VCOC or REOC status. Both VCOCs and REOCs must retain documents sufficient to demonstrate compliance with the requirements. Recent investigations by the Department of Labor have been requesting such items as airline, hotel and other expense receipts to demonstrate attendance at the meetings of the Board of Directors and on-site inspections

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If you have any questions concerning any of these requirements, or if you need assistance with your filings or other documents discussed herein, please contact an attorney in the Investment Management Group at Seward & Kissel.

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¹ An investment adviser exempt from registration pursuant to the private fund adviser exemption or the venture capital adviser exemption (each, an “exempt reporting adviser”) must complete and file with the SEC a limited subset of items on Form ADV Part 1A. The initial filing deadline is March 30, 2012. Accordingly, for an adviser with a fiscal year ending December 31, the adviser’s first annual updating amendment will be required in 2013.