Exempt reporting adviser (ERA)

Example

A manager runs a $60M Fund I whose terms do not meet the SEC's venture capital fund definition, so it files as an ERA under the private fund adviser exemption. Fund II closes at $110M. Regulatory assets under management for a private fund count uncalled commitments as well as invested capital, so the manager's figure is now $170M, over the $150 million line. It must register as an investment adviser within the transition period the rule allows, and from then on it is subject to the custody rule, the compliance program rule and Form PF.

Confused with

Registered investment adviser. Files the full Form ADV, adopts a compliance program, appoints a chief compliance officer and is subject to the custody rule and Form PF. An ERA is subject to none of those rules.

Venture capital exemption. One of the two routes to ERA status, with no asset cap but strict tests on what the fund holds, how much it borrows and whether LPs can redeem. The private fund adviser exemption is the other route.

In practice

ERA status is lighter, not empty. Anti-fraud provisions apply, the SEC can examine the adviser, the pay-to-play rule applies, and Form ADV must be updated each year. Schedule D is public and lists each fund with its auditor and administrator. State rules differ: some states exempt advisers that are federal ERAs and some do not, so a manager checks its home state before relying on the federal filing alone.