Colorado reduces compliance burden on fund managers

Some Colorado-based fund managers that are exempt from Securities and Exchange Commission registration will no longer have to register with the state regulator.

Provided the advisor only advises qualifying private funds, has not been subject to a “bad actor” disqualifying event, and its funds are exempt from registration under the Investment Company Act, the firm can bypass registration with the Colorado Division of Securities.

This will reduce the regulatory burden on some fund managers. Colorado and some other states had required firms that were not required to register with the SEC to register with the local regulator. In these cases, a fund advisor with more than $25 million under management, is required to file a truncated Form ADV as an exempt reporting advisor with the SEC and the state regulator.

“The new exemption brings Colorado in line with many other states who offer similar exemptions to registration for investment advisors who solely advise private funds,” Elizabeth Kemery Sipes, partner at law firm Bryan Cave, said in a client update.

Other states to offer some form of exemption include California, Connecticut and Massachusetts.