
[Federal Register Volume 82, Number 88 (Tuesday, May 9, 2017)]
[Proposed Rules]
[Pages 21487-21494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09334]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 275

[Release No. IA-4697; File No. S7-05-17]
RIN 3235-AM02


Amendments to Investment Advisers Act Rules To Reflect Changes 
Made by the FAST Act

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the definition of a venture capital 
fund (rule 203(l)-1) and the private fund adviser exemption (rule 
203(m)-1) under the Investment Advisers Act of 1940 (the ``Advisers 
Act'') in order to reflect changes made by title LXXIV, sections 74001 
and 74002 of the Fixing America's Surface Transportation Act of 2015 
(the ``FAST Act''), which amended sections 203(l) and 203(m) of the 
Advisers Act. Title LXXIV, section 74001 of the FAST Act amended the 
exemption from investment adviser registration for any adviser solely 
to one or more ``venture capital funds'' in Advisers Act section 203(l) 
by deeming ``small business investment companies'' to be ``venture 
capital funds'' for purposes of the exemption. Accordingly, we are 
proposing to amend the definition of a venture capital fund to include 
``small business investment companies.'' Title LXXIV, section 74002 of 
the FAST Act amended the exemption from investment adviser registration 
for any adviser solely to ``private funds'' with less than $150 million 
in assets under management in Advisers Act section 203(m) by excluding 
the assets of ``small business investment companies'' when calculating 
``private fund assets'' towards the registration threshold of $150 
million. Accordingly, we are proposing to amend the definition of 
``assets under management'' in the private fund adviser exemption to 
exclude the assets of ``small business investment companies.''

DATES: Comments on the proposed rule amendments should be received on 
or before June 8, 2017.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File No. S7-05-17 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments to Secretary, Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number S7-05-17. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Web site (http://www.sec.gov/rules/proposed.shtml). 
Comments are also available for Web site viewing and printing in the 
Commission's Public Reference Room, 100 F Street NE., Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly.
    Studies, memoranda or other substantive items may be added by the 
Commission or staff to the comment file during this rulemaking. A 
notification of the inclusion in the comment file of any such materials 
will be made available on the Commission's Web site. To ensure direct 
electronic receipt of such notifications, sign up through the ``Stay 
Connected'' option at www.sec.gov to receive notifications by email.

FOR FURTHER INFORMATION CONTACT: Jennifer Songer, Senior Counsel or 
Alpa Patel, Branch Chief at (202) 551-6787 or IArules@sec.gov, 
Investment Adviser Regulation Office, Division of Investment 
Management, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-8549.

SUPPLEMENTARY INFORMATION: The Commission is proposing amendments to 
rules 203(l)-1 [17 CFR 275.203(l)-1] and 203(m)-1 [17 CFR 275.203(m)-1] 
under the Investment Advisers Act of 1940 [15 U.S.C. 80b].\1\
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    \1\ Unless otherwise noted, when we refer to the Advisers Act, 
or any paragraph of the Advisers Act, we are referring to 15 U.S.C. 
80b of the United States Code [15 U.S.C. 80b], at which the Advisers 
Act is codified, and when we refer to Advisers Act rules, or any 
paragraph of these rules, we are referring to Title 17, Part 275 of 
the Code of Federal Regulations [17 CFR 275], in which these rules 
are published.
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Table of Contents

I. Background
II. Discussion
    A. Proposed Amendments to Rule 203(l)-1
    B. Proposed Amendments to Rule 203(m)-1
III. Economic Analysis
    A. Introduction and Economic Justification
    B. Costs and Benefits
    C. Efficiency, Competition, and Capital Formation
    D. Request for Comment
IV. Paperwork Reduction Act Analysis
V. Regulatory Flexibility Act Certification
VI. Consideration of the Impact on the Economy
VII. Statutory Authority
VIII. Text of Proposed Rule Amendments

I. Background

    The Fixing America's Surface Transportation Act of 2015 (the ``FAST 
Act'') \2\ amended sections 203(l) and 203(m) of the Investment 
Advisers Act of 1940 (the ``Advisers Act'') \3\ regarding the 
registration of investment advisers to small business investment 
companies (``SBICs'').\4\ Title LXXIV, section 74001

[[Page 21488]]

of the FAST Act amended the exemption from investment adviser 
registration for any adviser solely to one or more ``venture capital 
funds'' in Advisers Act section 203(l) (``venture capital fund adviser 
exemption'') by deeming SBICs to be ``venture capital funds'' for 
purposes of the exemption. Accordingly, we are proposing to amend the 
definition of ``venture capital funds'' in Advisers Act rule 203(l)-1 
to include SBICs. Title LXXIV, section 74002 of the FAST Act amended 
the exemption from investment adviser registration for any adviser 
solely to ``private funds'' with less than $150 million in assets under 
management in Advisers Act section 203(m) (``private fund adviser 
exemption'') by excluding the assets of SBICs for purposes of 
calculating private fund assets towards the registration threshold of 
$150 million.\5\ Accordingly, we are also proposing to amend the 
definition of ``assets under management'' in Advisers Act rule 203(m)-1 
to exclude the assets of SBICs.
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    \2\ Public Law 114-94, 129 Stat. 1312 (Dec. 4, 2015).
    \3\ 15 U.S.C. 80b.
    \4\ An SBIC is (other than an entity that has elected to be 
regulated or is regulated as a business development company pursuant 
to section 54 of the Investment Company Act of 1940): (A) A small 
business investment company that is licensed under the Small 
Business Investment Act of 1958 (``SBIA''), (B) an entity that has 
received from the Small Business Administration notice to proceed to 
qualify for a license as a small business investment company under 
the SBIA, which notice or license has not been revoked, or (C) an 
applicant that is affiliated with 1 or more licensed small business 
investment companies described in subparagraph (A) and that has 
applied for another license under the SBIA, which application 
remains pending. Advisers Act section 203(b)(7).
    \5\ The term ``private fund'' means an issuer that would be an 
investment company, as defined in section 3 of the Investment 
Company Act of 1940, but for section 3(c)(1) or 3(c)(7) of that Act. 
Advisers Act section 202(a)(29). While we believe most SBICs are 
private funds, it is possible for an SBIC to be an investment 
company registered with the Commission. See 13 CFR 107.115 (stating 
that a registered investment company is eligible to apply for an 
SBIC license).
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    Advisers Act section 203(b)(7) provides an exemption from 
investment adviser registration for advisers solely to SBICs (the 
``SBIC adviser exemption''). We believe that, prior to the enactment of 
the FAST Act, the SBIC adviser exemption was the primary exemption from 
investment adviser registration available to advisers to SBICs.\6\ The 
FAST Act expanded the applicability of the venture capital fund adviser 
exemption and the private fund adviser exemption to specifically 
include advisers to SBICs. Advisers relying on the SBIC adviser 
exemption are not subject to reporting or recordkeeping provisions 
under the Advisers Act or examination by our staff.\7\ Advisers who 
rely on the venture capital fund adviser exemption and the private fund 
adviser exemption are exempt from registration under the Advisers Act; 
however, they are considered ``exempt reporting advisers'' and must 
maintain such records and submit such reports as the Commission 
determines necessary or appropriate in the public interest or for the 
protection of investors.\8\ Exempt reporting advisers are required to 
file a subset of the information requested by Form ADV with the 
Commission but are not subject to many of the other substantive 
requirements to which registered investment advisers are subject.
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    \6\ Although we believe that most, if not all, SBICs are private 
funds, we believe that very few advisers to SBICs have private fund 
assets under management in the United States of less than $150 
million. Therefore, very few advisers to SBICs are likely to qualify 
for the private fund adviser exemption. See SBIC Program Overview, 
Small Business Administration, Office of Investment and Innovation, 
Data Management Branch, September 30, 2016, available at: https://www.sba.gov/sbic/general-information/program-overview (``SBIC 
Program Overview'').
    \7\ Under section 204(a) of the Advisers Act, the Commission has 
the authority to require an investment adviser to maintain records 
and provide reports, as well as the authority to examine such 
adviser's records, unless the adviser is specifically exempted from 
the requirement to register pursuant to Advisers Act section 203(b). 
Advisers Act section 203(b)(7) provides an exemption from 
registration for advisers solely to SBICs. Advisers Act sections 
204(a) and 203(b)(7); Exemptions for Advisers to Venture Capital 
Funds, Private Fund Advisers With Less Than $150 Million in Assets 
Under Management, and Foreign Private Advisers, Investment Advisers 
Act Release No. 3222 (June 22, 2011) [76 FR 39646 (July 6, 2011)] 
(``Exemptions Release'') at footnote 5 and accompanying text.
    \8\ Under Advisers Act section 204(a), the Commission has the 
authority to require an investment adviser to maintain records and 
provide reports, as well as the authority to examine such adviser's 
records, unless the adviser is specifically exempted from the 
requirement to register pursuant to Advisers Act section 203(b). 
Investment advisers that are exempt from registration in reliance on 
other sections of the Advisers Act, such as sections 203(l) or 
203(m), are not specifically exempted from the requirement to 
register pursuant to section 203(b), and thus the Commission has 
authority under Advisers Act section 204(a) to require those 
advisers to maintain records and provide reports and has authority 
to examine such advisers' records. Advisers Act sections 203(l)(1) 
and 203(m)(2). See also Exemptions Release supra footnote 7 at 
footnote 5 and accompanying text. Advisers Act rule 204-4 requires 
an exempt reporting adviser to complete and file reports on Form ADV 
by following the instructions in the Form, which specify the 
information that an exempt reporting adviser must provide. See 
``Frequently Asked Questions on Form ADV and IARD'' available at: 
https://www.sec.gov/divisions/investment/iard/iardfaq.shtml (``Form 
ADV FAQs'') at section entitled: ``Reporting to the SEC as an Exempt 
Reporting Adviser''; Form ADV: General Instructions available at: 
https://www.sec.gov/about/forms/formadv-instructions.pdf (``General 
Instructions to Form ADV'') at Instruction 3. Further, an adviser 
electing to be an exempt reporting adviser with the Commission must 
separately evaluate the need to register in any state in which it 
operates. General Instructions to Form ADV at Instruction 14.
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    Advisers to SBICs can now rely on the following exemptions from 
investment adviser registration with the Commission: (1) The SBIC 
adviser exemption and advise only SBICs; (2) the venture capital fund 
adviser exemption and advise both SBICs and venture capital funds (as 
defined in rule 203(l)-1); or (3) the private fund adviser exemption 
and advise both SBICs and non-SBIC private funds, provided those non-
SBIC private funds account for less than $150 million in assets under 
management in the United States.\9\
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    \9\ See FAST Act supra footnote 2. See generally, FAST Act 
Changes Affecting Investment Advisers to Small Business Investment 
Companies (March 2016), available at: https://www.sec.gov/investment/im-guidance-2016-03.pdf (``Staff Guidance'').
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    As discussed above, we are proposing to amend our rules regarding 
the definition of ``venture capital fund'' in Advisers Act rule 203(l)-
1 and the definition of ``assets under management'' in Advisers Act 
rule 203(m)-1 for private funds to reflect in our rules the changes 
made by the FAST Act's amendments to the Advisers Act.

II. Discussion

A. Proposed Amendments to Rule 203(l)-1

    The venture capital fund adviser exemption in section 203(l) of the 
Advisers Act provides that an investment adviser that solely advises 
venture capital funds is exempt from registration under the Advisers 
Act.\10\ Advisers who qualify for the venture capital fund adviser 
exemption are exempt from registration under the Advisers Act; however, 
they are considered ``exempt reporting advisers'' and must maintain 
such records and submit such reports as the Commission determines 
necessary or appropriate in the public interest or for the protection 
of investors.\11\ The FAST Act amended the venture capital fund adviser 
exemption by deeming SBICs to be

[[Page 21489]]

venture capital funds for purposes of the exemption.\12\
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    \10\ We note, however, that depending on the facts and 
circumstances, we may view two or more separately formed advisory 
entities, each of which purports to rely on a separate exemption 
from registration, as a single adviser for purposes of assessing the 
availability of exemptions from registration. For example, an 
adviser may not advise venture capital funds with more than $150 
million in assets under management in reliance on the venture 
capital fund adviser exemption and also advise other types of 
private funds with less than $150 million in assets under management 
in reliance on the private fund adviser exemption. See Exemptions 
Release supra footnote 7 at footnote 314, footnote 506 and 
accompanying text. See also In the Matter of TL Ventures Inc., 
Investment Advisers Act Release No. 3859 (June 20, 2014) (settled 
action); Advisers Act section 208(d), which prohibits a person from 
doing indirectly or through or by another person, any act or thing 
which it would be unlawful for such person to do directly.
    \11\ Advisers Act section 203(l)(1). See Rules Implementing 
Amendments to the Investment Advisers Act of 1940, Investment 
Advisers Act Release No. 3221 (June 22, 2011) [76 FR 42950 (July 11, 
2011)] (``Implementing Release'') at section II.B. Advisers Act rule 
204-4 requires an exempt reporting adviser to complete and file 
reports on Form ADV by following the instructions in the Form, which 
specify the information that an exempt reporting adviser must 
provide. See Form ADV FAQs supra footnote 8 at section entitled: 
``Reporting to the SEC as an Exempt Reporting Adviser''; General 
Instructions to Form ADV supra footnote 8 at Instruction 4.
    \12\ Advisers Act section 203(l)(2).
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    Advisers Act rule 203(l)-1 defines a ``venture capital fund'' for 
purposes of the venture capital fund adviser exemption.\13\ While most, 
if not all, SBICs meet the definition of a ``private fund'' under the 
Advisers Act,\14\ they may not meet the rule 203(l)-1 definition of a 
``venture capital fund.'' We are proposing to amend Advisers Act rule 
203(l)-1 to include SBICs in the definition of venture capital funds 
for purposes of the venture capital fund adviser exemption.\15\ 
Amending the definition of venture capital fund in Advisers Act rule 
203(l)-1 will make it consistent with Advisers Act section 203(l)(2), 
thereby reflecting in the rule the application of the venture capital 
fund adviser exemption to advisers to SBICs. Under this proposal, an 
adviser to SBICs who relies on the venture capital fund adviser 
exemption would be required to submit Form ADV reports to the 
Commission as an exempt reporting adviser, consistent with the current 
requirement for advisers relying on the venture capital fund adviser 
exemption.\16\
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    \13\ Advisers Act rule 203(l)-1(a) generally defines a ``venture 
capital fund'' as a private fund that: (i) Represents to investors 
and potential investors that it pursues a venture capital strategy; 
(ii) holds no more than 20 percent of the fund's capital commitments 
in assets that are not qualifying investments (other than short-term 
holdings); (iii) does not borrow or otherwise incur leverage in 
excess of 15 percent of the fund's capital commitments, and such 
borrowing is for a non-renewable term of no longer than 120 days 
(excluding certain guarantees of qualifying portfolio company 
obligations by the fund from the 120 day limit); (iv) does not offer 
its investors redemption or certain other liquidity rights except in 
extraordinary circumstances; and (v) is not registered under the 
Investment Company Act and has not elected to be treated as a 
business development company. See also Advisers Act rule 203(l)-1(b) 
and (c).
    \14\ Advisers Act section 202(a)(29).
    \15\ Proposed Advisers Act rule 203(l)-1(a).
    \16\ Advisers Act section 203(l)(1). See Implementing Release 
supra footnote 11 at section II.B.
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    We are requesting comment on the proposed amendment to rule 203(l)-
1.
     Prior to the enactment of the FAST Act, was the SBIC 
adviser exemption the primary exemption from investment adviser 
registration available to advisers to SBICs or did advisers to SBIC 
rely on other exemptions from registration? If so, which ones?
     Should we make any changes to the proposed amendment in 
order to better reflect the FAST Act's amendment to section 203(l) of 
the Advisers Act?
     Are there alternative methods for reflecting the FAST 
Act's amendment to section 203(l) of the Advisers Act that would be 
clearer?
     Like all exempt reporting advisers, advisers to SBICs 
relying on the proposed amendments would be required to report on Form 
ADV certain information about the private funds that they advise, 
including any SBIC that they advise that is a private fund.
    [cir] Should we revise Form ADV to require advisers to SBICs to 
report more information for SBICs than is currently required to be 
reported for private funds? For example, should we require advisers to 
provide an identifier, such as the U.S. Small Business Administration 
(``SBA'') license number for their SBICs? Would investors or other 
users benefit from such information? Why or why not?
    [cir] Should we revise Form ADV to require advisers to SBICs to 
report less information for SBICs than is currently required to be 
reported for private funds? Why or why not?

B. Proposed Amendments to Rule 203(m)-1

    The private fund adviser exemption in Advisers Act section 203(m) 
directs the Commission to provide an exemption from registration to any 
investment adviser that solely advises private funds if the adviser has 
assets under management in the United States of less than $150 
million.\17\ Advisers Act rule 203(m)-1 implements the private fund 
adviser exemption. Advisers who qualify for the private fund adviser 
exemption are exempt from registration under the Advisers Act; however, 
they are considered ``exempt reporting advisers'' and must maintain 
such records and submit such reports as the Commission determines 
necessary or appropriate in the public interest or for the protection 
of investors.\18\ The FAST Act amended the private fund adviser 
exemption to require that private fund advisers exclude the assets of 
their SBICs for purposes of calculating private fund assets towards the 
registration threshold of $150 million.
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    \17\ Supra footnote 10.
    \18\ Advisers Act section 203(m)(2). See Implementing Release 
supra footnote 11 at section II.B. Advisers Act rule 204-4 requires 
an exempt reporting adviser to complete and file reports on Form ADV 
by following the instructions in the Form, which specify the 
information that an exempt reporting adviser must provide. See Form 
ADV FAQs supra footnote 8 at section entitled: ``Reporting to the 
SEC as an Exempt Reporting Adviser''; General Instructions to Form 
ADV supra footnote 8 at Instruction 3. 
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    Advisers Act rule 203(m)-1(d)(1) defines ``assets under 
management'' for purposes of the private fund adviser exemption.\19\ We 
are proposing to amend Advisers Act rule 203(m)-1(d)(1) to exclude an 
adviser's regulatory assets under management attributable to SBICs from 
the definition of assets under management for purposes of the private 
fund adviser exemption.\20\ We believe that amending the definition of 
assets under management in Advisers Act rule 203(m)-1 to make it 
consistent with Advisers Act section 203(m)(3) would reflect that 
advisers to both private funds and SBICs can rely on the private fund 
adviser exemption without regard to the SBIC assets that they advise. 
Under this proposal, an adviser to SBICs who relies on the private fund 
adviser exemption would still be required to submit reports to the 
Commission as an exempt reporting adviser and to include the SBICs that 
it advises on its Form ADV, consistent with the current requirement for 
advisers relying on the private fund adviser exemption.\21\
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    \19\ For purpose of Advisers Act section 203(m), assets under 
management means the regulatory assets under management as 
determined under Item 5.F of Form ADV. Advisers Act rule 203(m)-
1(d)(1). Instruction 5.b. to Part 1A of Form ADV explains how to 
calculate regulatory assets under management for purposes of Item 
5.F of Part 1A of Form ADV. In general, it states that an adviser 
should include the securities portfolios for which it provides 
continuous and regular supervisory or management services. In the 
case of private funds, advisers are instructed to determine the 
current market value (or fair value) of the private fund's assets 
and the contractual amount of any uncalled commitment pursuant to 
which a person is obligated to acquire an interest in, or make a 
capital contribution to, the private fund. See Form ADV: 
Instructions for Part 1A available at https://www.sec.gov/about/forms/formadv-instructions.pdf at Instruction 5.b.4.
    \20\ Proposed Advisers Act rule 203(m)-1(d)(1).
    \21\ Advisers Act section 203(m)(2). See Implementing Release 
supra footnote 11 at section II.B.
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    We are requesting comment on the proposed amendment to rule 203(m)-
1.
     Should we make any changes to the proposed amendment in 
order to better reflect the FAST Act's amendment to section 203(m) of 
the Advisers Act?
     Are there alternative methods for reflecting the FAST 
Act's amendment to section 203(m) of the Advisers Act that would be 
clearer?

III. Economic Analysis

A. Introduction and Economic Justification

    The Commission is sensitive to the potential economic effects of 
the proposed amendments to Advisers Act rules 203(l)-1 and 203(m)-1. 
These effects include the benefits and costs to investment advisers, 
their funds, and the investors in their funds as well as the proposed 
amendments' implications for efficiency, competition, and capital 
formation. The economic effects of the proposed amendments are 
discussed below.

[[Page 21490]]

    The proposed amendments to Advisers Act rules 203(l)-1 and 203(m)-1 
would reflect changes made by title LXXIV, sections 74001 and 74002 of 
the FAST Act to the Advisers Act. While the FAST Act does not expressly 
require the Commission to amend the Advisers Act rules, the proposed 
amendments eliminate any confusion that might otherwise exist if 
Advisers Act rules 203(l)-1 and 203(m)-1 were not amended. Proposed 
Advisers Act rule 203(l)-1 would reflect that advisers to venture 
capital funds and SBICs qualify for the venture capital fund adviser 
exemption from registration. Proposed Advisers Act rule 203(m)-1 would 
reflect that advisers to SBIC and non-SBIC private funds with less than 
$150 million in non-SBIC private fund assets under management in the 
United States qualify for the private fund adviser exemption from 
registration.
Economic Baseline
    To establish a baseline useful for evaluating the economic effects 
of the proposed amendments, we briefly describe the nature of SBICs and 
then define the different classes of advisers that could be affected by 
the proposal.
    According to the SBA, SBICs are investment funds that make equity 
and debt investments in qualifying small businesses and are licensed 
and regulated by the SBA.\22\ SBICs have access to low-cost capital 
because of a guarantee by the SBA. According to the SBA, this funding 
subsidy is intended to promote the SBIC program's purpose of bridging 
the gap between the small business community's need for capital and 
traditional sources of financing that might otherwise be more 
expensive.\23\
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    \22\ SBIC Program Overview supra footnote 6.
    \23\ Id.
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    Advisers to SBICs may also advise non-SBIC private funds, including 
venture capital funds. Depending on the amount and type of assets they 
advise, SBIC advisers belong to one of three categories: (1) Registered 
investment advisers; (2) exempt reporting advisers; or (3) advisers 
exempt from registration and reporting requirements. Registered 
investment advisers are required to file Form ADV and are also subject 
to other substantive requirements including the establishment of a 
compliance program and a Code of Ethics.\24\ Exempt reporting advisers 
are required to file a subset of the information requested by Form ADV 
with the Commission but are not subject to many of the other 
substantive requirements that registered investment advisers are 
subject to. Finally, any adviser that solely advises SBICs is exempt 
from registering with the Commission under section 203(b)(7) of the 
Advisers Act and does not have an obligation to report information to 
the Commission.\25\
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    \24\ In addition to reporting requirements, registered 
investment advisers are required to comply with Advisers Act rules 
204-2, 204-3, 204(b)-1, 204A-1, 206(4)-1, 206(4)-2, 206(4)-3, 
206(4)-6 and 206(4)-7.
    \25\ See supra footnote 7.
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    Prior to the enactment of the FAST Act, an adviser to both SBICs 
and other non-SBIC private funds qualified for the private fund adviser 
exemption under Advisers Act rule 203(m)-1 if the adviser had assets 
under management in the United States, including assets of the SBICs it 
advised, of less than $150 million. Advisers to SBICs and other non-
SBIC private funds that did not qualify for the private fund adviser 
exemption were required to register with the Commission. In addition, 
advisers to both venture capital funds and SBICs were required to 
register with the Commission unless they qualified for the private fund 
adviser exemption.
    In establishing a baseline for the proposed amendments, two 
additional classes of investment advisers that did not advise SBICs 
prior to the FAST Act are relevant: (1) Advisers solely to venture 
capital funds that qualify for the venture capital fund adviser 
exemption from registration and are considered exempt reporting 
advisers; and (2) advisers solely to private funds with less than $150 
million in assets under management in the United States that qualify 
for the private fund adviser exemption from registration and are 
considered exempt reporting advisers. Prior to the FAST Act, advisers 
relying on the venture capital fund adviser exemption were required to 
register with the Commission if they added SBIC clients unless their 
total assets under management remained under $150 million, in which 
case they could instead rely on the private fund adviser exemption. In 
addition, prior to the FAST Act, advisers relying on the private fund 
adviser exemption were required to register with the Commission if they 
added SBIC clients that caused their total assets under management in 
the United States to equal or exceed $150 million.
    The FAST Act provided the classes of advisers discussed above with 
several options. First, registered investment advisers to SBICs and 
non-SBIC private funds can withdraw from registration and report to the 
Commission as exempt reporting advisers if their non-SBIC private fund 
assets under management in the United States are less than $150 
million. Second, registered investment advisers to SBICs and venture 
capital funds can withdraw from registration and report to the 
Commission as exempt reporting advisers. Finally, advisers that 
qualified for either the venture capital fund adviser or private fund 
adviser exemptions prior to the FAST Act can begin advising SBICs 
without changing their registration status independent of the amount of 
assets attributable to SBICs.
    For those advisers that benefit from any of the above options, it 
would have been in their best economic interest to exercise such 
options following the passage of the FAST Act, particularly after the 
Commission's Division of Investment Management issued a guidance update 
regarding the application of the FAST Act.\26\ That guidance update 
indicated that the Commission's Division of Investment Management would 
not object to advisers who exclude the assets of the SBICs they advise 
when determining whether they qualify for the private fund adviser 
exemption or advisers who consider SBICs to be venture capital funds 
for the purposes of the venture capital fund adviser exemption.\27\ We 
believe, therefore, that it is likely that advisers have already 
exercised these options if doing so was in their best interest. 
However, inconsistencies in the definitions of venture capital funds 
and assets under management that exist between the Advisers Act rules 
and the FAST Act may have discouraged some advisers from exercising 
these options. For example, these inconsistencies may result in assets 
under management being calculated differently by advisers for purposes 
of the private fund adviser exemption, which could lead to similar 
advisers determining their reporting statuses differently.
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    \26\ See Staff Guidance supra footnote 9.
    \27\ Id.
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    As of December 31, 2016, there were approximately 12,182 registered 
investment advisers reporting a total of approximately $66.8 trillion 
in regulatory assets under management.\28\ In addition, there were 
3,238 exempt reporting advisers, of whom 588 relied on the venture 
capital fund adviser exemption,\29\ 2,348 relied on the private fund 
adviser exemption,\30\ and 302 qualified for both exemptions. For

[[Page 21491]]

exempt reporting advisers that relied on the private fund adviser 
exemption, total private fund assets under management were 
approximately $124 billion.\31\ Registered investment advisers advise 
approximately 33,175 private funds, while exempt reporting advisers 
advise approximately 11,722 private funds. As of the end of 2016, there 
were 313 SBICs licensed by the SBA managing approximately $28 billion 
in assets.\32\ We are unable to identify which of those 313 SBICs are 
managed by advisers solely to SBICs compared to advisers that also 
advise other funds because section 203(b)(7) of the Advisers Act 
exempts advisers solely to SBICs from registration and reporting, and 
filers of Form ADV are not required to explicitly indicate whether they 
advise SBICs. Because filers of Form ADV are not required to explicitly 
indicate whether they advise SBICs, we are not able to estimate the 
number of advisers that have already taken advantage of the exemptions 
afforded to them by the FAST Act compared to the number of advisers who 
have not done so due to any inconsistencies between the Advisers Act 
rules and the FAST Act.
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    \28\ We calculate these estimates using the last Form ADV filing 
for each adviser in the 15 months prior to January 1, 2016. This 
allows us to exclude advisers that are technically still registered 
with the Commission but have not filed a Form ADV for their most 
recent fiscal year. We use the same approach in calculating 
statistics for exempt reporting advisers. Our estimate of assets 
under management excludes filings that did not report this value so 
it should be considered a lower bound.
    \29\ Form ADV, Part 1A, Item 2.B.(1).
    \30\ Form ADV, Part 1A, Item 2.B.(2).
    \31\ Form ADV, Schedule D, Section 2.B. We exclude filings that 
did not report this value from our calculation so it should be 
considered a lower bound. Advisers relying on the venture capital 
fund adviser exemption are not required to answer this question.
    \32\ See SBIC Program Overview supra footnote 6.
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    The proposed amendments may affect the classes of investment 
advisers mentioned above, the funds they advise, and the investors in 
those funds. We discuss the potential economic effects of the proposed 
amendments on these parties in the next two sections.

B. Costs and Benefits

    In this section, we discuss the costs and benefits that may result 
from the proposed amendments for each affected party. The economic 
effects discussed in this section only apply to the extent that 
advisers have not already exercised the exemption options provided to 
them under the baseline due to any inconsistencies between the FAST Act 
and the Advisers Act rules. As discussed above, we believe that it is 
likely that advisers have already exercised any exemption options 
provided to them by the FAST Act under the baseline if doing so was in 
their best interest, so we do not expect the magnitude of these effects 
to be significant. We discuss the amendments' likely impact on 
efficiency, competition, and capital formation in the next section.
    As discussed in the Economic Baseline Section, advisers solely to 
SBICs are exempt from registering as investment advisers with the 
Commission. To the extent that any inconsistencies between the FAST Act 
and Advisers Act rules 203(l)-1 and 203(m)-1 have discouraged advisers 
solely to SBICs from taking advantage of the venture capital fund 
adviser or private fund adviser exemptions, the proposed amendments 
could lead these advisers to take on additional venture capital or 
private fund clients. Such advisers can weigh the additional fee 
revenue associated with advising non-SBIC private funds against the 
costs of reporting to the Commission as exempt reporting advisers when 
determining whether to rely on either of the exemptions. We estimate 
that the annual cost of filing Form ADV for an exempt reporting adviser 
is $916.\33\ In addition, advisers that switch from exempt to exempt 
reporting status may incur indirect costs if the information they 
disclose on Form ADV, such as any disciplinary history, reduces 
investor demand for their advisory services. We are unable to estimate 
how many advisers solely to SBICs would choose to take on non-SBIC 
private funds as a result of the proposal because we do not have 
information on the demand for their advisory services from non-SBIC 
private funds or whether any additional business generated would offset 
these reporting costs. Furthermore, we cannot estimate the extent to 
which advisers solely to SBICs have been deterred from exercising their 
option to rely on the venture capital fund adviser and private fund 
adviser exemptions due to any inconsistencies between the FAST Act and 
the Advisers Act rules under the baseline.
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    \33\ ``Form ADV under the Investment Advisers Act of 1940'' 
(Office of Management and Budget ``OMB'' Control No. 3235-0049) 
Supporting Statement at footnotes 37-42 and accompanying text. The 
total aggregate annual monetized burden for exempt reporting 
advisers is estimated to be $2,976,632 assuming there are 3,248 such 
advisers, resulting in an estimated cost of approximately $916 per 
exempt reporting adviser. Similarly, the total aggregate annual 
monetized burden for registered investment advisers is estimated to 
be $89,427,727 assuming there are 12,024 such advisers, resulting in 
an estimated cost of approximately $7,437 per registered investment 
adviser.
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    The proposal provides registered advisers to SBICs and non-SBIC 
private funds that have not taken advantage of the venture capital fund 
adviser and private fund adviser exemptions due to inconsistencies 
between the FAST Act and the Advisers Act rules with clarification on 
the option to switch from registered investment adviser to exempt 
reporting adviser status. This option is difficult to value, but its 
value is broadly determined by the cost reductions associated with the 
change in registration status compared to the explicit and implicit 
costs of withdrawing from registration. Advisers that elect to change 
from registered to exempt reporting adviser status should expect to 
face reduced ongoing costs associated with filing Form ADV because, as 
exempt reporting advisers, they would only be required to complete 
certain portions of Form ADV.\34\ We estimate the annual cost savings 
associated with filing Form ADV as an exempt reporting adviser instead 
of as a registered investment adviser to be $6,521.\35\ Furthermore, 
such advisers would no longer bear the costs associated with the 
substantive requirements of being an adviser registered with the 
Commission.\36\ Such advisers would incur the one-time cost of filing a 
Form ADV-W withdrawal, which we estimate to be $119 per full withdrawal 
and $13 per partial withdrawal.\37\ They may also incur one-time 
operational costs associated with switching from registered to exempt 
reporting status, such as those associated with adapting information 
technology systems to a new reporting regime. Finally, to the extent 
that advisers benefit from marketing themselves as registered 
investment advisers to client funds and investors, they will forgo this 
benefit by withdrawing from registration. Because advisers are not 
required to rely on either of the exemptions in Advisers Act rules 
203(l) or 203(m) even though they may qualify for them, we expect only 
those registered investment advisers that would experience a net 
benefit by relying on these exemptions and have not already done so 
following the FAST

[[Page 21492]]

Act and subsequent Staff Guidance to withdraw from registration.\38\
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    \34\ Exempt reporting advisers that are not also registering 
with any state securities authority must complete only the following 
Items of Form ADV, Part 1A: 1, 2, 3, 6, 7, 10, and 11, as well as 
corresponding schedules. Exempt reporting advisers that are 
registering with any state securities authority must complete all of 
Form ADV. See Form ADV FAQs supra footnote 8 at section entitled: 
``Reporting to the SEC as an Exempt Reporting Adviser''; General 
Instructions to Form ADV supra footnote 8 at Instruction 3.
    \35\ See supra footnote 33. The estimated annual cost of filing 
Form ADV as a registered investment adviser is approximately $7,437 
and the estimated cost for an exempt reporting adviser is 
approximately $916.
    \36\ See supra footnote 24 for a more detailed list of these 
requirements.
    \37\ ``Rule 203-2 and Form ADV-W under the Investment Advisers 
Act of 1940'' (OMB Control No. 3235-0313) Supporting Statement at 
footnotes 7 and 9 and accompanying text. An adviser would file full 
withdrawal if it was only registered with the Commission. An adviser 
would file a partial withdrawal if it was required to remain 
registered with one or more States. See Form ADV FAQs supra footnote 
8 at section entitled: ``Form ADV-W.''
    \38\ An adviser that qualifies for one of these exemptions can 
still choose to register with the Commission if it has sufficient 
assets under management. See Exemptions Release supra footnote 7 at 
footnote 24 and accompanying text.
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    Investors in private funds, including venture capital funds and 
SBICs, may experience costs and benefits as a result of the proposed 
amendments. If investors face fixed costs in transacting with a given 
adviser, for example in performing any necessary due diligence, they 
may benefit if the proposed amendments encourage more advisers to 
advise both SBIC and non-SBIC private funds, allowing investors to 
consolidate different types of investments with a single adviser. We 
cannot quantify the extent to which investors prefer to use a single 
adviser or the number of advisers who will expand into either SBICs or 
non-SBIC private funds because we do not have the information needed to 
assess investors' latent demand for consolidated advice services or the 
number of advisers that have been deterred from expanding their client 
bases under the baseline. We therefore cannot estimate the magnitude of 
this potential cost reduction for investors.
    In addition, to the extent that the proposed amendments result in 
advisers changing their status from registered to exempt reporting, it 
may impose costs on investors. If investors value the transparency 
provided by complete Form ADV reporting and the safeguards associated 
with the other substantive requirements of being a registered 
investment adviser, then the proposed amendments could impose costs on 
investors if they result in advisers changing their status from 
registered to exempt reporting. However, such investors have the option 
of moving their investments to advisers that are registered and, as 
noted above, we expect that advisers will weigh the benefits and costs 
associated with remaining registered in connection with any change in 
reporting status. The proposal could also impose costs on investors if 
any reduction in transparency or the other substantive requirements 
associated with registration reduce the ability of the Commission to 
protect investors from potentially fraudulent investment advisory 
schemes.

C. Efficiency, Competition, and Capital Formation

    As discussed above, because the proposed amendments potentially 
reduce the reporting requirements for advisers to both SBICs and non-
SBIC private funds, they could result in an increased number of 
advisers in both markets. Advisers solely to SBICs may enter the market 
for venture capital or other private fund advisory services, and 
current advisers to non-SBIC private funds may enter the market for 
SBIC advisory services. In this section, we discuss the potential 
effects of these changes on efficiency, competition, and capital 
formation. As was the case above, the economic effects discussed in 
this section only apply to the extent that advisers have not already 
exercised the exemption options provided to them under the baseline due 
to any inconsistencies between the FAST Act and the Advisers Act rules, 
and we do not expect the magnitude of these effects to be significant.
    Changes in the costs of advising both SBIC and non-SBIC private 
funds, as described above, could have several competitive effects. 
First, to the extent that non-SBIC private fund advisers find it 
profitable to enter the market for SBICs under the proposed amendments, 
the amendments might increase competition in that market, resulting in 
reduced profits for SBIC advisers and lower advisory fees for their 
SBICs and their investors. Similarly, to the extent that SBIC advisers 
find it profitable to enter the non-SBIC private fund advisory market, 
the proposed amendments might increase competition in that market, 
resulting in reduced profits for non-SBIC private fund advisers and 
lower advisory fees for their non-SBIC private funds and their 
investors. Whether the proposed amendments result in such a 
reallocation of advisory services depends on whether advisers find it 
profitable to expand operations into new markets and whether they can 
do so without changing the quality or quantity of services in current 
markets. While we cannot precisely estimate the relative likelihood of 
the above competitive effects, the fact that the market for SBIC 
advisers is an order of magnitude smaller than the market for non-SBIC 
private fund advisers suggests that non-SBIC private fund advisers are 
more likely to have benefitted from expanding into the SBIC market 
following the FAST Act's enactment, thereby increasing the amount of 
competition in that market. As discussed above, it is likely that most 
advisers would have already exercised this option under the baseline if 
it was in their best interest to do so. Therefore, the competitive 
effects of the proposed amendments are not likely to be significant.
    Any relative shift of advisory talent from one segment of the 
market to another could also have effects on efficiency and capital 
formation. To the extent that advisers who expand into new markets as a 
result of the proposal possess skill in identifying investment 
opportunities, an increase in the supply of advisers in the SBIC and/or 
non-SBIC private fund markets could result in more efficient investment 
decisions and market prices that more accurately reflect the 
fundamental value of assets where applicable (for example, SBICs invest 
in private businesses that do not trade on public exchanges, but some 
private funds invest in publicly-traded securities). Also, any increase 
in the number of advisers in the SBIC market could make more capital 
available to small businesses if the increased supply of SBIC advisers 
attracts more capital to that market. In addition, to the extent that 
there are economies of scale in the provision of advisory services, 
advisory services may be provided at lower aggregate cost if the 
proposed amendments result in an expansion of advisers in either the 
SBIC or non-SBIC private fund market. To the extent that the proposed 
amendments result in reduced transparency into advisers because they 
opt to switch from registered to exempt reporting status, and to the 
extent that investors rely on that transparency when making investment 
decisions, the proposed amendments might cause a reduction in the 
efficiency of investor allocations to these advisers. Any reduction in 
transparency could also reduce the aggregate amount of capital managed 
by investment advisers if investors cannot find suitable registered 
investment advisers as replacements and these investors value 
transparency more than any benefits, such as potentially lower advisory 
fees, of the proposed amendments. Finally, if the proposed amendments 
increase the supply of investment advisers to SBICs and non-SBIC 
private funds, and these advisers attract assets that were not already 
invested in other markets, they may increase the aggregate amount of 
capital investment.

D. Request for Comment

    We are requesting comment on our analysis of the potential economic 
effects of the proposed amendments to Advisers Act rules 203(l)-1 and 
203(m)-1.
     Are there any other affected parties that we should 
consider in our analysis?
     Do commenters agree that our quantitative estimates of the 
costs and benefits are reasonable and accurate? If not, please provide 
estimates of these costs, and explain why those estimates are 
different.

[[Page 21493]]

     Are there any other costs to investment advisers, funds, 
or their investors that we should consider in this analysis? If so, 
please explain why those costs may be relevant to our analysis, and 
provide estimates for those costs.
     Are there other effects on efficiency, competition, and 
capital formation that we should consider in our analysis?
     We have not identified any reasonable alternatives to the 
proposed amendments. Are there alternative approaches to the proposed 
amendments that we should consider?

IV. Paperwork Reduction Act Analysis

    We do not believe that the proposed amendments to reflect changes 
made by the FAST Act make any substantive modifications to any existing 
collection of information requirements or impose any new substantive 
recordkeeping or information collection requirements within the meaning 
of the Paperwork Reduction Act of 1995 (``PRA'').\39\
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    \39\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The proposed amendments to reflect the changes made by the FAST Act 
as described in Section II above may shift the number of advisers 
between each class of advisers as well as include advisers solely to 
SBICs that take on additional non-SBIC venture capital fund or private 
fund clients and therefore would become exempt reporting advisers.
    However, we do not have information at this time to estimate 
whether and to what extent these changes may occur and therefore 
believe that the current burden and cost estimates for the existing 
collection of information requirements remain appropriate.\40\ Thus, we 
believe that the proposed amendments should not impose substantive new 
burdens on the overall population of respondents or affect the current 
overall burden estimates for the affected forms.\41\ Accordingly, we 
are not revising any burden and cost estimates in connection with these 
amendments. We request comment on whether our belief that the proposed 
amendments would not impose substantive new burdens on the overall 
population of respondents or affect the current overall burden 
estimates for the affected forms is correct.
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    \40\ The most recent Paperwork Reduction Act analysis for Form 
ADV, which is pending approval by the Office of Management and 
Budget, is based upon the number of registered advisers and exempt 
reporting advisers as of May 1, 2016. Because approximately five 
months had passed between the signing of the FAST Act and May 1, 
2016, we believe that most of the advisers who wanted to change 
their registration status as a result of the FAST Act, did so in 
that five month period and are therefore included in the most recent 
Paperwork Reduction Act analysis for Form ADV. ``Form ADV under the 
Investment Advisers Act of 1940'' (OMB Control No. 3235-0049).
    \41\ See Section III above.
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V. Regulatory Flexibility Act Certification

    Pursuant to section 605(b) of the Regulatory Flexibility Act,\42\ 
the Commission hereby certifies that the proposed amendments to 
Advisers Act rules 203(l)-1 and 203(m)-1 would not, if adopted, have a 
significant economic impact on a substantial number of small entities. 
Under Commission rules, for the purposes of the Advisers Act and the 
Regulatory Flexibility Act, an investment adviser generally is a small 
entity if it: (i) Has assets under management having a total value of 
less than $25 million; (ii) did not have total assets of $5 million or 
more on the last day of its most recent fiscal year; and (iii) does not 
control, is not controlled by, and is not under common control with 
another investment adviser that has assets under management of $25 
million or more, or any person (other than a natural person) that had 
$5 million or more on the last day of its most recent fiscal year 
(``small adviser'').\43\
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    \42\ 5 U.S.C. 605(b).
    \43\ Rule 0-7(a) (17 CFR 275.0-7(a)).
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    Small advisers to SBICs and venture capital funds and small 
advisers to SBICs and private funds would be generally prohibited from 
registering with the Commission under section 203A of the Advisers Act 
because of their assets under management.\44\ However, there may be 
some small advisers to SBICs and venture capital funds and some small 
advisers to SIBCs and private funds that are not prohibited from 
registering with the Commission.\45\ We believe that small advisers to 
SBICs and venture capital funds that are not prohibited from 
registering with the Commission are able to rely on the venture capital 
fund adviser exemption under section 203(l) of the Advisers Act as 
implemented by Advisers Act rule 203(l)-1. We also believe that small 
advisers to SBICs and private funds that are not prohibited from 
registering with the Commission are able to rely on the private fund 
adviser exemption under section 203(m) of the Advisers Act as 
implemented by Advisers Act rule 203(m)-1. As discussed in Section III 
above, we do not believe that our proposed amendments, if adopted, 
would result in a significant economic impact. Also, we do not know the 
exact number of advisers to SBICs. However, as of the end of 2016, 
there were 313 SBICs licensed by the SBA.\46\ Even if we assume that 
there is a separate adviser for each SBIC, the maximum number of 
advisers to SBICs would be only 313. We believe that only a small 
subset of these 313 advisers would meet the definition of small adviser 
described above. For these reasons, the Commission preliminarily 
believes that the proposed amendments to Advisers Act rules 203(l)-1 
and 203(m)-1 would not, if adopted, have a significant economic impact 
on a substantial number of small entities.
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    \44\ Section 203A(a)(1)(A) of the Advisers Act generally 
prohibits an investment adviser regulated as an investment adviser 
by the State in which it maintains its principal office and place of 
business from registering with the Commission unless the adviser has 
at least $25 million of assets under management. Section 
203(A)(a)(2) further prohibits certain advisers from registering 
with the Commission unless they have at least $100 million of assets 
under management.
    \45\ For example, the prohibition of Advisers Act section 
203A(a) does not apply to advisers that are required by the laws of 
15 or more States to register as an investment adviser with the 
state securities authority in the respective States. Advisers Act 
rule 203A-2(d) (17 CFR 275. 203A-2(d)).
    \46\ See SBIC Program Overview supra footnote 6.
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    The Commission requests written comments regarding this 
certification. The Commission requests that commenters describe the 
nature of any impact on small businesses and provide empirical data to 
support the extent of the impact.

VI. Consideration of the Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996, or ``SBREFA,'' \47\ we must advise the Office of 
Management and Budget whether a proposed regulation constitutes a 
``major'' rule. Under SBREFA, a rule is considered ``major'' where, if 
adopted, it results in or is likely to result in (1) an annual effect 
on the economy of $100 million or more; (2) a major increase in costs 
or prices for consumers or individual industries; or (3) significant 
adverse effects on competition, investment or innovation.
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    \47\ Public Law 104-121, Title II, 110 Stat. 857 (1996) 
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note 
to 5 U.S.C. 601).
---------------------------------------------------------------------------

    We request comment on the potential impact of the proposed 
amendments on the economy on an annual basis. Commenters are requested 
to provide empirical data and other factual support for their views to 
the extent possible.

VII. Statutory Authority

    The Commission is proposing to amend rule 203(l)-1 under the 
authority set forth in sections 211(a) and 203(l) of the Advisers Act, 
(15 U.S.C. 80b-11(a) and 80b-3(l), respectively). The Commission is 
proposing to amend rule

[[Page 21494]]

203(m)-1 under the authority set forth in sections 211(a) and 203(m) of 
the Advisers Act (15 U.S.C. 80b-11(a) and 80b-3(m), respectively).

List of Subjects in 17 CFR Part 275

    Reporting and recordkeeping requirements; Securities.

VIII. Text of Proposed Rule Amendments

    For the reasons set forth in the preamble, the Commission proposes 
to amend Title 17, Chapter II of the Code of Federal Regulations as 
follows.

PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940

0
1. The authority citation for part 275 continues to read, in part, as 
follows:

    Authority: 15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(11)(H), 80b-
2(a)(17), 80b-3, 80b-4, 80b-4a, 80b-6(4), 80b-6a, and 80b-11, unless 
otherwise noted.
* * * * *
0
2. Amend section 275.203(l)-1 by revising the introductory text to 
paragraph (a) to read as follows:


Sec.  275.203(l)-1  Venture capital fund defined.

    (a) Venture capital fund defined.- For purposes of section 203(l) 
of the Act (15. U.S.C. 80b-3(l)), a venture capital fund is any entity 
described in subparagraph (A), (B), or (C) of section 203(b)(7) of the 
Act (15 U.S.C. 80b-3(b)(7)) (other than an entity that has elected to 
be regulated or is regulated as a business development company pursuant 
to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a-53)) 
or any private fund that:
* * * * *
0
3. Amend section 275.203(m)-1 by revising paragraph (d)(1) to read as 
follows:


Sec.  275.203(m)-1  Private fund adviser exemption.

* * * * *
    (d) * * *
    (1) Assets under management means the regulatory assets under 
management as determined under Item 5.F of Form ADV (Sec.  279.1 of 
this chapter) except that the regulatory assets under management 
attributable to a private fund that is an entity described in 
subparagraph (A), (B), or (C) of section 203(b)(7) of the Act (15 
U.S.C. 80b-3(b)(7)) (other than an entity that has elected to be 
regulated or is regulated as a business development company pursuant to 
section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a-53)) 
shall be excluded from the definition of assets under management for 
purposes of this section.
* * * * *

    By the Commission.

    Dated: May 3, 2017.
Brent J. Fields,
Secretary.
[FR Doc. 2017-09334 Filed 5-8-17; 8:45 am]
 BILLING CODE 8011-01-P


