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Investment Advisors Act

Who is required to comply?
Hedge Fund Managers/Advisors and their companies with assets worth $25M or more.

What is it?

The SEC implemented a new regulation on private investment pools called the Investment Advisors Act (IAA) in February 2006. All hedge fund managers with $25M worth of assets or more is liable under the IAA regulations. The SEC requires that all said companies be registered under the Investment Advisors Act.

What are the requirements?

IAA mandates that Investment Manager and Advisors archive their records, largely electronic correspondence, for a minimum of five years in an easily accessible location from the end of the fiscal year in which that record was created. For the first two years the records are required to be located internally in the Investment office and are subject to random review by the Commission. Archived messages must be stored in an archive available online, with a second copy stored on tamper proof media. Further, messages are required to be time and date stamped with a unique serial ID.

What is the cost of non-compliance?

Heavy fines, imprisonment and loss of corporate reputation.

What is the significance of Investment Advisors Act compliance?

The Investment Advisors Act provides corporate accountability against fraudulent activity and corruption. It also safeguards financial information from potential leakage.