The Unibanco Letters - Dual-Hatting Regulations and Global Enforcement
Extraterritorial Scope of US Adviser Regulation
Global expansion of investment management firms raises issues relating to the sometimes unclear scope of the
extraterritorial reach of US Adviser regulation:
1. Firms increasingly seek to establish "satellite" offices in key markets
2. Firms often rely on "global" investment teams for different mandates
Section 203(a) of the Investment Advisers Act of 1940 (Advisers Act) prohibits an investment adviser from operating an investment
advisory business unless the adviser is registered with the US Securities and Exchange Commission (SEC) or qualifies for an
exemption from registration
。 The most widely used exemption from registration was the "Private Adviser Exemption"
•
The Private Adviser Exemption was repealed by the Dodd-Frank Act as part of a program to regulate advisers of
private funds
•
The Private Adviser Exemption was replaced with a much more limited series of exemptions, applicable only to
advisers with AUM in the United States of less than $150M who only advise private funds or certain very small
foreign private advisers
✰ SEC guidance in a series of no-action letters (the Unibanco Letters) permit certain "Dual-Hatting" arrangements, whereby services
are provided cross-border by personnel of unregistered advisers
。 "Dual-Hatting” refers to a situation where a person is employed by one adviser entity (sometimes called a "Participating
Affiliate") but may participate in the provision of advisory services to the client of another related advisory entity
Morgan Lewis
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