The Dodd–Frank Wall Street Reform and Consumer Protection Act, is a federal statute signed into law on July 21, 2010. The Act offers many sweeping changes to the financial regulatory environment and affects almost every aspect of the nation’s financial services industry. Under the Act, investment managers/advisers to private equity funds and all private investment funds will have to register as investment advisers with the SEC no later than July 21, 2011. There is a provision that exempts managers of private equity funds with less than $150 million in assets under management from registering. If you do not fall within the exemption, then failing to register would constitute a willful violation of the act.
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It is an absolute certainty that more and more hedge funds of all shapes and sizes are buyers of liability insurance protection. This is mostly due to increased due diligence on the part of the investor base and their requirements to carry the applicable insurance protection. Institutional investors have always had a reputation for having really stringent risk management guidelines and mandates. In light of the various investment scandals and numerous investment frauds, even individual high-net worth and qualified investors request that each fund group carry certain insurance protection. This wasn't always the case.
The Whistleblower Provision (Section 922 of the Dodd Frank Act) specifies that a person who provides to the SEC, original information of securities fraud within the company that leads to an enforcement penalty of $1 million or more may be entitled to collect between 10 and 30 percent of the penalties of $1 million or more. The Act prohibits employer retaliation against whistleblowers by employers and would provide for the whistleblower’s immediate reinstatement, as well as double back pay, attorneys’ fees, and other reasonable costs.