Previously, I reported that the Massachusetts Securities Division had proposed an exemption from investment adviser registration for advisers to private funds. In late winter, the division adopted these regulations as final (with small changes). They are, more or less, identical to the NASAA model rule and include the model rule’s grandfathering provisions.
As part of the rule, advisers to 3(c)(1) private funds (that are not venture capital funds) must, among other requirements, accept only qualified clients (as defined in SEC regulations) as investors. However, under the grandfathering provision, an adviser to a 3(c)(1) private fund may have non-qualified clients as investors only if the fund ceased to accept non-qualified clients as of February 3, 2012. (In the previous proposed rule, this date was March 30, 2012). [Read more…]