1296 Federal Register / Vol. 83, No. 8 / Thursday, January 11, 2018 / Rules and Regulations 

1Prior to the adoption of ASC Topic 321, FASB 

ASC Topic 320, Investments—Debt and Equity 

Securities, permitted investments in equity 

securities with readily determinable fair values to 

be classified as (1) available-for-sale, with changes 

in fair value recognized in other comprehensive 

income, or as (2) trading securities, with changes in 

fair value recognized in net income. 

1Unless otherwise noted, when we refer to the 

Advisers Act, or any paragraph of the Advisers Act, 

we are referring to 15 U.S.C. 80b of the United 

States Code [15 U.S.C. 80b], at which the Advisers 

Act is codified, and when we refer to Advisers Act 

rules, or any paragraph of these rules, we are 

referring to title 17, part 275 of the Code of Federal 

Regulations [17 CFR part 275], in which these rules 

are published. 

2Public Law 114–94, 129 Stat. 1312 (Dec. 4, 

2015). 

3An SBIC is (other than an entity that has elected 

to be regulated or is regulated as a business 

development company pursuant to section 54 of the 

Investment Company Act of 1940): (A) A small 

business investment company that is licensed 

under the Small Business Investment Act of 1958 

(‘‘SBIA’’), (B) an entity that has received from the 

Small Business Administration notice to proceed to 

qualify for a license as a small business investment 

company under the SBIA, which notice or license 

has not been revoked, or (C) an applicant that is 

affiliated with 1 or more licensed small business 

investment companies described in subparagraph 

(A) and that has applied for another license under 

the SBIA, which application remains pending. 

Advisers Act section 203(b)(7). 

Specifically, the staff is updating the 

Series in order to bring existing 

guidance into conformity with the 

Financial Accounting Standards Board 

(‘‘FASB’’) Accounting Standards 

Codification (‘‘ASC’’) Topic 321, 

Investments—Equity Securities (‘‘ASC 

Topic 321’’). The FASB adopted ASC 

Topic 321 through its issuance of 

Accounting Standards Update No. 

2016–01, Financial Instruments— 

Overall (Subtopic 825–10): Recognition 

and Measurement of Financial Assets 

and Financial Liabilities. 

The following describes the changes 

made to the Staff Accounting Bulletin 

Series that are presented at the end of 

this release: 

1. Topic 5: Miscellaneous Accounting 

a. Topic 5.M in the Staff Accounting 

Bulletin Series entitled Other Than 

Temporary Impairment of Certain 

Investments in Equity Securities (‘‘Topic 

5.M’’) is no longer applicable upon a 

registrant’s adoption of ASC Topic 321. 

Topic 5.M provided the staff’s views on 

evaluating whether an impairment loss 

should be recognized in net income for 

investments in equity securities that 

were measured at fair value with 

changes in fair value presented in other 

comprehensive income.1 ASC Topic 321 

establishes new guidance that 

eliminates the ability to present changes 

in the fair value of investments in equity 

securities within other comprehensive 

income. After a registrant adopts ASC 

Topic 321, investments in equity 

securities that previously qualified for 

presenting changes in fair value within 

other comprehensive income will be 

measured at fair value with changes in 

fair value presented immediately in net 

income. Therefore, ASC Topic 321 

eliminates the need for Topic 5.M. 

Accordingly, the staff hereby amends 

the Staff Accounting Bulletin Series as 

follows: 

* * * * * 

Topic 5: Miscellaneous Accounting 

* * * * * 

M.1. Impact of a Registrant’s Adoption 

of FASB ASC Topic 321, Investments— 

Equity Securities—Overall 

Topic 5.M is no longer applicable 

upon a registrant’s adoption of ASC 

Topic 321. Topic 5.M provided the 

staff’s views on evaluating whether an 

impairment loss should be recognized 

in net income for investments in equity 

securities that were measured at fair 

value with changes in fair value 

presented in other comprehensive 

income. ASC Topic 321 establishes new 

guidance that eliminates the ability to 

present changes in the fair value of 

investments in equity securities within 

other comprehensive income, which 

eliminates the need for Topic 5.M. 

Registrants that have not yet adopted 

ASC Topic 321 should continue to refer 

to Topic 5.M. 

* * * * * 

[FR Doc. 2018–00352 Filed 1–10–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Part 275 

[Release No. IA–4839; File No. S7–05–17] 

RIN 3235–AM02 

Exemptions From Investment Adviser 

Registration for Advisers to Small 

Business Investment Companies 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule. 

SUMMARY: We are adopting amendments 

to the rule that defines a venture capital 

fund (rule 203(l)–1) and the rule that 

implements the private fund adviser 

exemption (rule 203(m)–1) under the 

Investment Advisers Act of 1940 (the 

‘‘Advisers Act’’) in order to reflect 

changes made by title LXXIV, sections 

74001 and 74002 of the Fixing 

America’s Surface Transportation Act of 

2015 (the ‘‘FAST Act’’), which amended 

sections 203(l) and 203(m) of the 

Advisers Act. Title LXXIV, section 

74001 of the FAST Act amended the 

exemption from investment adviser 

registration for any adviser solely to one 

or more ‘‘venture capital funds’’ in 

Advisers Act section 203(l) by deeming 

‘‘small business investment companies’’ 

to be ‘‘venture capital funds’’ for 

purposes of the exemption. 

Accordingly, we are amending the 

definition of a venture capital fund to 

include ‘‘small business investment 

companies.’’ Title LXXIV, section 74002 

of the FAST Act amended the 

exemption from investment adviser 

registration for any adviser solely to 

‘‘private funds’’ with less than $150 

million in assets under management in 

Advisers Act section 203(m) by 

excluding the assets of ‘‘small business 

investment companies’’ when 

calculating ‘‘private fund assets’’ 

towards the registration threshold of 

$150 million. Accordingly, we are 

amending the definition of ‘‘assets 

under management’’ in the rule that 

implements the private fund adviser 

exemption to exclude the assets of 

‘‘small business investment 

companies.’’ 

DATES: Effective March 12, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Jennifer Songer, Senior Counsel, or Sara 

Cortes, Assistant Director, at (202) 551– 

6787 or IArules@sec.gov, Investment 

Adviser Regulation Office, Division of 

Investment Management, Securities and 

Exchange Commission, 100 F Street NE, 

Washington, DC 20549–8549. 

SUPPLEMENTARY INFORMATION: The 

Commission is adopting amendments to 

rules 203(l)–1 [17 CFR 275.203(l)\1] and 

203(m)–1 [17 CFR 275.203(m)–1] under 

the Investment Advisers Act of 1940 [15 

U.S.C. 80b].1

Table of Contents 

I. Background 

II. Discussion 

A. Amendment to Rule 203(l)–1 

B. Amendment to Rule 203(m)–1 

III. Effective Date 

IV. Economic Analysis 

A. Introduction and Economic Justification 

B. Costs and Benefits 

C. Efficiency, Competition, and Capital 

Formation 

V. Paperwork Reduction Act Analysis 

VI. Regulatory Flexibility Act Certification 

VII. Statutory Authority 

I. Background 

Prior to the enactment of the Fixing 

America’s Surface Transportation Act of 

2015 (the ‘‘FAST Act’’),2 we believe that 

investment advisers to small business 

investment companies (‘‘SBICs’’) 3

primarily relied upon an exemption 


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Federal Register / Vol. 83, No. 8 / Thursday, January 11, 2018 / Rules and Regulations 1297 

4 15 U.S.C. 80b. 

5Advisers Act section 203(b)(7). Although we 

believe that most, if not all, SBICs are private funds, 

we believe that very few advisers to SBICs have 

private fund assets under management in the 

United States of less than $150 million. Therefore, 

very few advisers to SBICs are likely to qualify for 

the private fund adviser exemption. See SBIC 

Program Overview, Small Business Administration, 

Office of Investment and Innovation, Data 

Management Branch, September 30, 2016, available 

at: https://www.sba.gov/sbic/general-information/ 

program-overview (‘‘SBIC Program Overview’’). 

6The term ‘‘private fund’’ means an issuer that 

would be an investment company, as defined in 

section 3 of the Investment Company Act of 1940, 

but for section 3(c)(1) or 3(c)(7) of that Act. Advisers 

Act section 202(a)(29). While we believe that most 

SBICs are private funds, it is possible for an SBIC 

to be an investment company registered with the 

Commission. See 13 CFR 107.115 (stating that a 

registered investment company is eligible to apply 

for an SBIC license). 

7See Amendments to Investment Advisers Act 

Rules to Reflect Changes Made by the FAST Act, 

Investment Advisers Act Release No. 4697 (May 3, 

2017) [82 FR 21487 (May 9, 2017)] (‘‘Proposing 

Release’’). 

8Under section 204(a) of the Advisers Act, the 

Commission has the authority to require an 

investment adviser to maintain records and provide 

reports, as well as the authority to examine such 

adviser’s records, unless the adviser is specifically 

exempted from the requirement to register pursuant 

to Advisers Act section 203(b). Advisers Act section 

203(b)(7) provides an exemption from registration 

for advisers solely to SBICs. Advisers Act sections 

204(a) and 203(b)(7); Exemptions for Advisers to 

Venture Capital Funds, Private Fund Advisers With 

Less Than $150 Million in Assets Under 

Management, and Foreign Private Advisers, 

Investment Advisers Act Release No. 3222 (June 22, 

2011) [76 FR 39646 (July 6, 2011)] (‘‘Exemptions 

Release’’) at footnote 5 and accompanying text. 

9Under Advisers Act section 204(a), the 

Commission has the authority to require an 

investment adviser to maintain records and provide 

reports, as well as the authority to examine such 

adviser’s records, unless the adviser is specifically 

exempted from the requirement to register pursuant 

to Advisers Act section 203(b). Investment advisers 

that are exempt from registration in reliance on 

other sections of the Advisers Act, such as sections 

203(l) or 203(m), are not specifically exempted from 

the requirement to register pursuant to section 

203(b), and thus the Commission has authority 

under Advisers Act section 204(a) to require those 

advisers to maintain records and provide reports 

and has authority to examine such advisers’ 

records. Advisers Act sections 203(l)(1) and 

203(m)(2). See also Exemptions Release supra 

footnote 8 at footnote 5 and accompanying text. 

Advisers Act rule 204–4 requires an exempt 

reporting adviser to complete and file reports on 

Form ADV by following the instructions in the 

Form, which specify the information that an exempt 

reporting adviser must provide. See ‘‘Frequently 

Asked Questions on Form ADV and IARD’’ 

available at: https://www.sec.gov/divisions/ 

investment/iard/iardfaq.shtml (‘‘Form ADV FAQs’’) 

at section entitled: Reporting to the SEC as an 

Exempt Reporting Adviser; Form ADV: General 

Instructions available at: https://www.sec.gov/ 

about/forms/formadv-instructions.pdf (‘‘General 

Instructions to Form ADV’’) at Instruction 3. 

Further, an adviser electing to be an exempt 

reporting adviser with the Commission must 

separately evaluate the need to register in any state 

in which it operates. General Instructions to Form 

ADV at Instruction 14. 

10 In addition to reporting requirements, 

registered investment advisers are required to 

comply with Advisers Act rules 204–2, 204–3, 

204(b)–1, 204A–1, 206(4)–1, 206(4)–2, 206(4)–3, 

206(4)–6 and 206(4)–7. 

11See FAST Act supra footnote 2. See generally, 

FAST Act Changes Affecting Investment Advisers to 

Small Business Investment Companies (March 

2016), available at: https://www.sec.gov/investment/ 

im-guidance-2016-03.pdf (‘‘Staff Guidance’’). 

12Proposing Release supra footnote 7. 

13Comment letters submitted in File No. S7–05– 

17 are available on the Commission’s website at: 

https://www.sec.gov/comments/s7-05-17/ 

s70517.htm. 

14See Comment Letter of Daphne K. Ross (June 

7, 2017) (generally addressing the need for 

consumer protections), Comment Letter of Donald 

H. Homan (June 5, 2017) (commenting on the 

impact of regulations on the investment advisory 

industry) and Comment Letter of Thomas Garrett 

(June 3, 2017) (making a request that did not 

address the rule proposal). 

15We note, however, that depending on the facts 

and circumstances, we may view two or more 

separately formed advisory entities, each of which 

purports to rely on a separate exemption from 

registration, as a single adviser for purposes of 

assessing the availability of exemptions from 

registration. For example, an adviser may not advise 

venture capital funds with more than $150 million 

in assets under management in reliance on the 

venture capital fund adviser exemption and also 

advise other types of private funds with less than 

$150 million in assets under management in 

reliance on the private fund adviser exemption. See 

Exemptions Release supra footnote 8 at footnote 

314, footnote 506 and accompanying text. See also 

In the Matter of TL Ventures Inc., Investment 

Advisers Act Release No. 3859 (June 20, 2014) 

(settled action); Advisers Act section 208(d) 

(prohibiting a person from doing indirectly or 

Continued 

from investment adviser registration 

under the Investment Advisers Act of 

1940 (the ‘‘Advisers Act’’) 4 for advisers 

solely to SBICs (the ‘‘SBIC adviser 

exemption’’).5 The FAST Act expanded 

the applicability of two additional 

exemptions from investment adviser 

registration for investment advisers to 

SBICs: (1) The exemption for any 

adviser solely to one or more ‘‘venture 

capital funds’’ in Advisers Act section 

203(l) (the ‘‘venture capital fund adviser 

exemption’’), and (2) the exemption for 

any adviser solely to ‘‘private funds’’ 

with less than $150 million in assets 

under management in Advisers Act 

section 203(m) (the ‘‘private fund 

adviser exemption’’). This had the effect 

of permitting investment advisers to 

SBICs to advise both SBICs and other 

types of private funds without being 

required to register as investment 

advisers with the Commission. 

The FAST Act amended sections 

203(l) and 203(m) of the Advisers Act 

regarding the registration of investment 

advisers to SBICs. Title LXXIV, section 

74001 of the FAST Act amended the 

venture capital fund adviser exemption 

by deeming SBICs to be ‘‘venture capital 

funds’’ for purposes of the exemption. 

Title LXXIV, section 74002 of the FAST 

Act amended the private fund adviser 

exemption by excluding the assets of 

SBICs for purposes of calculating 

private fund assets towards the 

registration threshold of $150 million.6

Accordingly, on May 3, 2017,7 we 

proposed to amend (1) the definition of 

‘‘venture capital funds’’ in Advisers Act 

rule 203(l)–1 to include SBICs and (2) 

the definition of ‘‘assets under 

management’’ in Advisers Act rule 

203(m)–1 to exclude the assets of SBICs. 

Advisers who rely on the SBIC 

adviser exemption are not subject to 

reporting or recordkeeping provisions 

under the Advisers Act or examination 

by our staff.8 Advisers who rely on the 

venture capital fund adviser exemption 

and the private fund adviser exemption 

are exempt from registration under the 

Advisers Act; however, they are 

considered ‘‘exempt reporting advisers’’ 

and must maintain such records and 

submit such reports as the Commission 

determines necessary or appropriate in 

the public interest or for the protection 

of investors.9 Exempt reporting advisers 

are required to file a subset of the 

information requested by Form ADV 

with the Commission but are not subject 

to many of the other substantive 

requirements to which registered 

investment advisers are subject.10

Since the enactment of the FAST Act, 

advisers to SBICs have been able to rely 

on the following exemptions from 

investment adviser registration with the 

Commission: (1) The SBIC adviser 

exemption by advising only SBICs; (2) 

the venture capital fund adviser 

exemption by advising both SBICs and 

venture capital funds (as defined in rule 

203(l)–1); or (3) the private fund adviser 

exemption by advising both SBICs and 

non-SBIC private funds, provided those 

non-SBIC private funds account for less 

than $150 million in assets under 

management in the United States.11

As discussed above, we proposed to 

amend the definition of a ‘‘venture 

capital fund’’ in Advisers Act rule 

203(l)–1 to include SBICs and to amend 

the definition of ‘‘assets under 

management’’ in Advisers Act rule 

203(m)–1 to exclude the assets of 

SBICs.12 We received three comment 

letters,13 none of which specifically 

addressed the proposed amendments.14

We are adopting the amendments as 

proposed. 

II. Discussion 

A. Amendment to Rule 203(l)–1 

The venture capital fund adviser 

exemption in section 203(l) of the 

Advisers Act provides an exemption 

from registration under the Advisers Act 

for investment advisers that solely 

advise venture capital funds.15 Advisers 


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through or by another person, any act or thing 

which it would be unlawful for such person to do 

directly). 

16Advisers Act section 203(l)(1). See Rules 

Implementing Amendments to the Investment 

Advisers Act of 1940, Investment Advisers Act 

Release No. 3221 (June 22, 2011) [76 FR 42950 (July 

11, 2011)] (‘‘Implementing Release’’) at section II.B. 

Advisers Act rule 204–4 requires an exempt 

reporting adviser to complete and file reports on 

Form ADV by following the instructions in the 

Form, which specify the information that an exempt 

reporting adviser must provide. See Form ADV 

FAQs supra footnote 9 at section entitled: Reporting 

to the SEC as an Exempt Reporting Adviser; General 

Instructions to Form ADV supra footnote 9 at 

Instruction 4. 

17Advisers Act section 203(l)(2). 

18Advisers Act rule 203(l)–1(a) generally defines 

a ‘‘venture capital fund’’ as a private fund that: (i) 

Represents to investors and potential investors that 

it pursues a venture capital strategy; (ii) holds no 

more than 20 percent of the fund’s capital 

commitments in assets that are not qualifying 

investments (other than short-term holdings); (iii) 

does not borrow or otherwise incur leverage in 

excess of 15 percent of the fund’s capital 

commitments, and such borrowing is for a nonrenewable term of no longer than 120 days 

(excluding certain guarantees of qualifying portfolio 

company obligations by the fund from the 120 day 

limit); (iv) does not offer its investors redemption 

or certain other liquidity rights except in 

extraordinary circumstances; and (v) is not 

registered under the Investment Company Act and 

has not elected to be treated as a business 

development company. See also Advisers Act rule 

203(l)–1(b) and (c). 

19Advisers Act section 202(a)(29). 

20Proposed amended Advisers Act rule 203(l)– 

1(a). 

21Amended Advisers Act rule 203(l)–1(a). 

22Advisers Act section 203(l)(1). See 

Implementing Release supra footnote 16 at section 

II.B. 

23Supra footnote 15. 

24Advisers Act section 203(m)(2). See 

Implementing Release supra footnote 16 at section 

II.B. Advisers Act rule 204–4 requires an exempt 

reporting adviser to complete and file reports on 

Form ADV by following the instructions in the 

Form, which specify the information that an exempt 

reporting adviser must provide. See Form ADV 

FAQs supra footnote 9 at section entitled: Reporting 

to the SEC as an Exempt Reporting Adviser; General 

Instructions to Form ADV supra footnote 9 at 

Instruction 3. 

25Advisers Act section 203(m)(3). 

26For purpose of Advisers Act section 203(m), 

assets under management means the regulatory 

assets under management as determined under Item 

5.F of Form ADV. Advisers Act rule 203(m)–1(d)(1). 

Instruction 5.b. to Part 1A of Form ADV explains 

how to calculate regulatory assets under 

management for purposes of Item 5.F of Part 1A of 

Form ADV. In general, it states that an adviser 

should include the securities portfolios for which 

it provides continuous and regular supervisory or 

management services. In the case of a private fund, 

advisers are instructed to determine the current 

market value (or fair value) of the private fund’s 

assets and the contractual amount of any uncalled 

commitment pursuant to which a person is 

obligated to acquire an interest in, or make a capital 

contribution to, the private fund. See Form ADV: 

Instructions for Part 1A available at: https://

www.sec.gov/about/forms/formadv-instructions.pdf 

at Instruction 5.b.4. 

27Proposed amended Advisers Act rule 203(m)– 

1(d)(1). 

28Amended Advisers Act rule 203(m)–1(d)(1). 

29Advisers Act section 203(m)(2). See 

Implementing Release supra footnote 16 at section 

II.B. 

30See supra footnotes 13 and 14. 

who rely on the venture capital fund 

adviser exemption are exempt from 

registration under the Advisers Act; 

however, they are considered ‘‘exempt 

reporting advisers’’ and must maintain 

such records and submit such reports as 

the Commission determines necessary 

or appropriate in the public interest or 

for the protection of investors.16 The 

FAST Act amended the venture capital 

fund adviser exemption by deeming 

SBICs to be venture capital funds for 

purposes of the exemption.17

Advisers Act rule 203(l)–1 defines a 

‘‘venture capital fund’’ for purposes of 

the venture capital fund adviser 

exemption.18 While most, if not all, 

SBICs meet the definition of a ‘‘private 

fund’’ under the Advisers Act,19 they 

may not meet the rule 203(l)–1 

definition of a ‘‘venture capital fund.’’ 

We proposed to amend Advisers Act 

rule 203(l)–1 to include SBICs in the 

definition of venture capital funds for 

purposes of the venture capital fund 

adviser exemption.20 We did not receive 

any comments on the proposed 

amendment, and we are adopting the 

amendment as proposed.21 Amending 

the definition of venture capital fund in 

Advisers Act rule 203(l)–1 makes it 

consistent with Advisers Act section 

203(l)(2), thereby reflecting in the rule 

the application of the venture capital 

fund adviser exemption to advisers to 

SBICs. An adviser to SBICs who relies 

on the venture capital fund adviser 

exemption will be required to submit 

Form ADV reports to the Commission as 

an exempt reporting adviser, consistent 

with the current requirement for 

advisers relying on the venture capital 

fund adviser exemption.22

B. Amendment to Rule 203(m)–1 

The private fund adviser exemption 

in Advisers Act section 203(m) directs 

the Commission to provide an 

exemption from registration to any 

investment adviser that solely advises 

private funds if the adviser has assets 

under management in the United States 

of less than $150 million.23 Advisers 

Act rule 203(m)–1 implements the 

private fund adviser exemption. 

Advisers who rely on the private fund 

adviser exemption are exempt from 

registration under the Advisers Act; 

however, they are considered ‘‘exempt 

reporting advisers’’ and must maintain 

such records and submit such reports as 

the Commission determines necessary 

or appropriate in the public interest or 

for the protection of investors.24 The 

FAST Act amended the private fund 

adviser exemption to require that 

private fund advisers exclude the assets 

of their SBICs for purposes of 

calculating private fund assets towards 

the registration threshold of $150 

million.25

Advisers Act rule 203(m)–1(d)(1) 

defines ‘‘assets under management’’ for 

purposes of the private fund adviser 

exemption.26 The rule 203(m)–1(d)(1) 

definition of assets under management 

includes an adviser’s regulatory assets 

under management attributable to 

SBICs. We proposed to amend Advisers 

Act rule 203(m)–1(d)(1) to exclude an 

adviser’s regulatory assets under 

management attributable to SBICs from 

the definition of assets under 

management for purposes of the private 

fund adviser exemption.27 We did not 

receive any comments on our proposed 

amendment, and we are adopting the 

amendment as proposed.28 Amending 

the definition of assets under 

management in Advisers Act rule 

203(m)–1 to make it consistent with 

Advisers Act section 203(m)(3) will 

reflect that advisers to both private 

funds and SBICs can rely on the private 

fund adviser exemption without regard 

to the SBIC assets that they advise. An 

adviser to SBICs who relies on the 

private fund adviser exemption will be 

required to submit reports to the 

Commission as an exempt reporting 

adviser and to include the SBICs that it 

advises on its Form ADV, consistent 

with the current requirement for 

advisers relying on the private fund 

adviser exemption.29

III. Effective Date 

The effective date of the amendments 

to rules 203(l)–1 and 203(m)–1 is March 

12, 2018. 

IV. Economic Analysis 

A. Introduction and Economic 

Justification 

The Commission is sensitive to the 

potential economic effects of the 

amendments to Advisers Act rules 

203(l)–1 and 203(m)–1 we are adopting 

today. These effects include the benefits 

and costs to investment advisers, their 

funds, and the investors in their funds 

as well as the amendments’ implications 

for efficiency, competition, and capital 

formation. We discussed these effects in 

our economic analysis of the proposed 

amendments to Advisers Act rules 

203(l)–1 and 203(m)–1 and we did not 

receive any comments on this 

analysis.30 The economic baseline 

estimates have been revised to reflect 

updates to industry figures that were 

utilized in the Proposing Release. 


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31SBIC Program Overview supra footnote 5. 

32 Id. 

33Supra footnote 10. 34See supra footnote 8. 

35See Staff Guidance supra footnote 11. 

36 Id. 

37We calculate these estimates using the last 

Form ADV filing for each adviser in the 15 months 

prior to July 1, 2017. This allows us to exclude 

advisers that are technically still registered with the 

Commission but have not filed a Form ADV for 

their most recent fiscal year. We use the same 

approach in calculating statistics for exempt 

reporting advisers. Our estimate of assets under 

management excludes filings that did not report 

this value so it should be considered a lower bound. 

However, these changes are only 

marginally different from the proposal 

and, accordingly, the analysis of the 

amendments’ economic effects remains 

unchanged. 

The amendments to Advisers Act 

rules 203(l)–1 and 203(m)–1 reflect 

changes made by title LXXIV, sections 

74001 and 74002 of the FAST Act to the 

Advisers Act. While the FAST Act does 

not expressly require the Commission to 

amend the Advisers Act rules, the 

amendments eliminate any confusion 

that might otherwise exist if Advisers 

Act rules 203(l)–1 and 203(m)–1 were 

not amended. As adopted, Advisers Act 

rule 203(l)–1 reflects that advisers to 

venture capital funds and SBICs qualify 

for the venture capital fund adviser 

exemption from registration. As 

adopted, Advisers Act rule 203(m)–1 

reflects that advisers to SBIC and nonSBIC private funds with less than $150 

million in non-SBIC private fund assets 

under management in the United States 

qualify for the private fund adviser 

exemption from registration. 

Economic Baseline 

To establish a baseline useful for 

evaluating the economic effects of the 

amendments, we briefly describe the 

nature of SBICs and then define the 

different classes of advisers that could 

be affected by the amendments. 

According to the Small Business 

Administration (the ‘‘SBA’’), SBICs are 

investment funds that make equity and 

debt investments in qualifying small 

businesses and are licensed and 

regulated by the SBA.31 SBICs have 

access to low-cost capital because of a 

guarantee by the SBA. According to the 

SBA, this funding subsidy is intended to 

promote the SBIC program’s purpose of 

bridging the gap between the small 

business community’s need for capital 

and traditional sources of financing that 

might otherwise be more expensive.32

Advisers to SBICs may also advise 

non-SBIC private funds, including 

venture capital funds. Depending on the 

amount and type of assets they advise, 

SBIC advisers belong to one of three 

categories: (1) Registered investment 

advisers; (2) exempt reporting advisers; 

or (3) advisers exempt from registration 

and reporting requirements. Registered 

investment advisers are required to file 

Form ADV and are also subject to other 

substantive requirements including the 

establishment of a compliance program 

and a Code of Ethics.33 Exempt 

reporting advisers are required to file a 

subset of the information requested by 

Form ADV with the Commission but are 

not subject to many of the other 

substantive requirements to which 

registered investment advisers are 

subject. Finally, any adviser that solely 

advises SBICs is exempt from registering 

with the Commission under section 

203(b)(7) of the Advisers Act and does 

not have an obligation to report 

information to the Commission.34

Prior to the enactment of the FAST 

Act, an adviser to both SBICs and other 

non-SBIC private funds qualified for the 

private fund adviser exemption under 

Advisers Act rule 203(m)–1 if the 

adviser had assets under management in 

the United States, including assets of 

the SBICs it advised, of less than $150 

million. Advisers to SBICs and other 

non-SBIC private funds that did not 

qualify for the private fund adviser 

exemption were required to register 

with the Commission. In addition, 

advisers to both venture capital funds 

and SBICs were required to register with 

the Commission unless they qualified 

for the private fund adviser exemption. 

In establishing a baseline for the 

amendments, two additional classes of 

investment advisers that did not advise 

SBICs prior to the FAST Act are 

relevant: (1) Advisers solely to venture 

capital funds that rely on the venture 

capital fund adviser exemption from 

registration and are considered exempt 

reporting advisers; and (2) advisers 

solely to private funds with less than 

$150 million in assets under 

management in the United States that 

rely on the private fund adviser 

exemption from registration and are 

considered exempt reporting advisers. 

Prior to the FAST Act, advisers relying 

on the venture capital fund adviser 

exemption were required to register 

with the Commission if they added 

SBIC clients unless their total assets 

under management remained under 

$150 million, in which case they could 

instead rely on the private fund adviser 

exemption. In addition, prior to the 

FAST Act, advisers relying on the 

private fund adviser exemption were 

required to register with the 

Commission if they added SBIC clients 

that caused their total assets under 

management in the United States to 

equal or exceed $150 million. 

The FAST Act provided the classes of 

advisers discussed above with several 

options. First, registered investment 

advisers to SBICs and non-SBIC private 

funds can withdraw from registration 

and report to the Commission as exempt 

reporting advisers if their non-SBIC 

private fund assets under management 

in the United States are less than $150 

million. Second, registered investment 

advisers to SBICs and venture capital 

funds can withdraw from registration 

and report to the Commission as exempt 

reporting advisers. Finally, advisers that 

relied on either the venture capital fund 

adviser or private fund adviser 

exemption prior to the FAST Act can 

begin advising SBICs without changing 

their registration status independent of 

the amount of assets attributable to 

SBICs. 

For those advisers that benefit from 

any of the above options, it would have 

been in their best economic interest to 

exercise such options following the 

passage of the FAST Act, particularly 

after the Commission’s Division of 

Investment Management issued a 

guidance update regarding the 

application of the FAST Act.35 That 

guidance update indicated that the 

Commission’s Division of Investment 

Management would not object to 

advisers who exclude the assets of the 

SBICs they advise when determining 

whether they qualify for the private 

fund adviser exemption or advisers who 

consider SBICs to be venture capital 

funds for the purposes of the venture 

capital fund adviser exemption.36 We 

believe, therefore, that it is likely that 

advisers have already exercised these 

options if doing so was in their 

economic interest. However, 

inconsistencies in the definitions of 

venture capital funds and assets under 

management that exist between the 

Advisers Act rules and the FAST Act 

may be discouraging some advisers from 

exercising these options. Similarly, 

these inconsistencies may result in 

assets under management being 

calculated differently by advisers for 

purposes of the private fund adviser 

exemption, which could lead to 

similarly-situated advisers reaching 

different conclusions as to their 

reporting status. 

As of June 30, 2017, there were 

approximately 12,474 registered 

investment advisers reporting a total of 

approximately $70.1 trillion in 

regulatory assets under management.37

In addition, there were 3,332 exempt 

reporting advisers, of whom 623 relied 

on the venture capital fund adviser 


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38Form ADV, Part 1A, Item 2.B.(1). 

39Form ADV, Part 1A, Item 2.B.(2). 

40Form ADV, Schedule D, Section 2.B. We 

exclude filings that did not report this value from 

our calculation so it should be considered a lower 

bound. Advisers relying on the venture capital fund 

adviser exemption are not required to answer this 

question. 

41See the SBIC Quarterly Report as of March, 31 

2017, available at: https://www.sba.gov/sites/ 

default/files/articles/Quarterly_Data_as_of_June_

30_2017.pdf. 

42 Form ADV under the Investment Advisers Act 

of 1940 (Office of Management and Budget ‘‘OMB’’ 

Control No. 3235–0049) Supporting Statement at 

footnotes 37–42 and accompanying text. The total 

aggregate annual monetized burden for exempt 

reporting advisers is estimated to be $2,976,632 

assuming there are 3,248 such advisers, resulting in 

an estimated cost of approximately $916 per exempt 

reporting adviser. Similarly, the total aggregate 

annual monetized burden for registered investment 

advisers is estimated to be $89,427,727 assuming 

there are 12,024 such advisers, resulting in an 

estimated cost of approximately $7,437 per 

registered investment adviser. 

43Exempt reporting advisers that are not also 

registering with any state securities authority must 

complete only the following Items of Form ADV, 

Part 1A: 1, 2, 3, 6, 7, 10, and 11, as well as 

corresponding schedules. Exempt reporting 

advisers that are registering with any state securities 

authority must complete all of Form ADV. See Form 

ADV FAQs supra footnote 9 at section entitled: 

Reporting to the SEC as an Exempt Reporting 

Adviser; General Instructions to Form ADV supra 

footnote 9 at Instruction 3. 

44See supra footnote 42. The estimated annual 

cost of filing Form ADV as a registered investment 

adviser is approximately $7,437 and the estimated 

cost for an exempt reporting adviser is 

approximately $916. 

45See supra footnote 10 for a more detailed list 

of these requirements. 

46Rule 203–2 and Form ADV–W under the 

Investment Advisers Act of 1940 (OMB Control No. 

3235–0313) Supporting Statement at footnotes 7 

and 9 and accompanying text. An adviser would 

file full withdrawal if it was only registered with 

the Commission. An adviser would file a partial 

withdrawal if it was required to remain registered 

with one or more States. See Form ADV FAQs 

supra footnote 9 at section entitled: Form ADV–W. 

exemption,38 2,401 relied on the private 

fund adviser exemption,39 and 308 

qualified for both exemptions. For 

exempt reporting advisers that relied on 

the private fund adviser exemption, 

total private fund assets under 

management were approximately $235 

billion.40 Registered investment 

advisers advise approximately 34,343 

private funds, while exempt reporting 

advisers advise approximately 12,562 

private funds. As of June 30, 2017, there 

were 315 SBICs licensed by the SBA 

managing approximately $30 billion in 

assets.41 We are unable to identify 

which of those 315 SBICs are managed 

by advisers solely to SBICs compared to 

advisers that also advise other funds 

because section 203(b)(7) of the 

Advisers Act exempts advisers solely to 

SBICs from registration and reporting, 

and filers of Form ADV are not required 

to explicitly indicate whether they 

advise SBICs. Because filers of Form 

ADV are not required to explicitly 

indicate whether they advise SBICs, we 

are not able to estimate the number of 

advisers that have already taken 

advantage of the exemptions afforded to 

them by the FAST Act compared to the 

number of advisers who have not done 

so due to any inconsistencies between 

the Advisers Act rules and the FAST 

Act. 

The amendments may affect the 

classes of investment advisers 

mentioned above, the funds they advise, 

and the investors in those funds. We 

discuss the potential economic effects of 

the amendments on these parties in the 

next two sections. 

B. Costs and Benefits 

In this section, we discuss the costs 

and benefits that may result from the 

amendments for each affected party. 

The economic effects discussed in this 

section only apply to the extent that 

advisers have not already exercised the 

exemption options provided to them 

under the baseline due to any 

inconsistencies between the FAST Act 

and the Advisers Act rules. As 

discussed above, we believe that it is 

likely that advisers have already 

exercised any exemption options 

provided to them by the FAST Act 

under the baseline if it were in their 

interest to do so; thus, we do not expect 

the magnitude of these effects to be 

significant. We discuss the 

amendments’ likely impact on 

efficiency, competition, and capital 

formation in the next section. 

As discussed in the Economic 

Baseline Section, advisers solely to 

SBICs are exempt from registering as 

investment advisers with the 

Commission. To the extent that any 

inconsistencies between the FAST Act 

and Advisers Act rules 203(l)–1 and 

203(m)–1 have discouraged advisers 

solely to SBICs from taking advantage of 

the venture capital fund adviser or 

private fund adviser exemptions, the 

amendments could lead these advisers 

to take on additional venture capital or 

private fund clients. Such advisers can 

weigh the additional fee revenue 

associated with advising non-SBIC 

private funds against the costs of 

reporting to the Commission as exempt 

reporting advisers when determining 

whether to rely on either of the 

exemptions. We estimate that the 

annual cost of filing Form ADV for an 

exempt reporting adviser is $916.42 In 

addition, advisers that switch from 

exempt to exempt reporting status may 

incur indirect costs if the information 

they disclose on Form ADV, such as any 

disciplinary history, reduces investor 

demand for their advisory services. We 

are unable to estimate how many 

advisers solely to SBICs would choose 

to take on non-SBIC private funds as a 

result of the amendments because we do 

not have information on the demand for 

their advisory services from non-SBIC 

private funds or whether any additional 

business generated would offset these 

reporting costs. Furthermore, we cannot 

estimate the extent to which advisers 

solely to SBICs have been deterred from 

exercising their option to rely on the 

venture capital fund adviser and private 

fund adviser exemptions due to any 

inconsistencies between the FAST Act 

and the Advisers Act rules under the 

baseline. 

The amendments provide registered 

advisers to SBICs and non-SBIC private 

funds that have not taken advantage of 

the venture capital fund adviser and 

private fund adviser exemptions due to 

inconsistencies between the FAST Act 

and the Advisers Act rules with 

clarification on the option to switch 

from registered investment adviser to 

exempt reporting adviser status. This 

option is difficult to value, but its value 

is broadly determined by the cost 

reductions associated with the change 

in registration status compared to the 

explicit and implicit costs of 

withdrawing from registration. Advisers 

that elect to change from registered to 

exempt reporting adviser status should 

expect to face reduced ongoing costs 

associated with filing Form ADV 

because, as exempt reporting advisers, 

they would only be required to 

complete certain portions of Form 

ADV.43 We estimate the annual cost 

savings associated with filing Form 

ADV as an exempt reporting adviser 

instead of as a registered investment 

adviser to be $6,521.44 Furthermore, 

such advisers would no longer bear the 

costs associated with the substantive 

requirements of being an adviser 

registered with the Commission.45 Such 

advisers would incur the one-time cost 

of filing a Form ADV–W withdrawal, 

which we estimate to be $119 per full 

withdrawal and $13 per partial 

withdrawal.46 They may also incur onetime operational costs associated with 

switching from registered to exempt 

reporting status, such as those 

associated with adapting information 

technology systems to a new reporting 

regime. Finally, to the extent that 

advisers benefit from marketing 

themselves as registered investment 

advisers to client funds and investors, 

they will forgo this benefit by 

withdrawing from registration. Because 

advisers are not required to rely on 

either of the exemptions in Advisers Act 


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Federal Register / Vol. 83, No. 8 / Thursday, January 11, 2018 / Rules and Regulations 1301 

47An adviser that qualifies for one of these 

exemptions can still choose to register with the 

Commission if it has sufficient assets under 

management. See Exemptions Release supra 

footnote 8 at footnote 24 and accompanying text. 

rules 203(l)–1 or 203(m)–1 even though 

they may qualify for them, we expect 

only those registered investment 

advisers that would experience a net 

benefit by relying on these exemptions 

and have not already done so following 

the FAST Act and subsequent Staff 

Guidance to withdraw from 

registration.47

Investors in private funds, including 

venture capital funds and SBICs, may 

experience costs and benefits as a result 

of the amendments. If investors face 

fixed costs in transacting with a given 

adviser, for example in performing any 

necessary due diligence, they may 

benefit if the amendments encourage 

more advisers to advise both SBIC and 

non-SBIC private funds, allowing 

investors to consolidate different types 

of investments with a single adviser. We 

cannot quantify the extent to which 

investors prefer to use a single adviser 

or the number of advisers who will 

expand into either SBICs or non-SBIC 

private funds because we do not have 

the information needed to assess 

investors’ latent demand for 

consolidated advice services or the 

number of advisers that have been 

deterred from expanding their client 

bases under the baseline. We therefore 

cannot estimate the magnitude of this 

potential cost reduction for investors. 

In addition, to the extent that the 

amendments result in advisers changing 

their status from registered to exempt 

reporting, it may impose costs on 

investors. If investors value the 

transparency provided by complete 

Form ADV reporting and the safeguards 

associated with the other substantive 

requirements of being a registered 

investment adviser, then the 

amendments could impose costs on 

investors if they result in advisers 

changing their status from registered to 

exempt reporting. However, such 

investors have the option of moving 

their investments to advisers that are 

registered and, as noted above, we 

expect that advisers will weigh the 

benefits and costs associated with 

remaining registered in connection with 

any change in reporting status. The 

amendments could also impose costs on 

investors if any reduction in 

transparency or the other substantive 

requirements associated with 

registration reduce the ability of the 

Commission to protect investors from 

potentially fraudulent investment 

advisory schemes. 

C. Efficiency, Competition, and Capital 

Formation 

As discussed above, because the 

amendments potentially reduce the 

reporting requirements for advisers to 

both SBICs and non-SBIC private funds, 

they could result in an increased 

number of advisers in both markets. 

Advisers solely to SBICs may enter the 

market for venture capital or other 

private fund advisory services, and 

current advisers to non-SBIC private 

funds may enter the market for SBIC 

advisory services. In this section, we 

discuss the potential effects of these 

changes on efficiency, competition, and 

capital formation. As was the case 

above, the economic effects discussed in 

this section only apply to the extent that 

advisers have not already exercised the 

exemption options provided to them 

under the baseline due to any 

inconsistencies between the FAST Act 

and the Advisers Act rules, and we do 

not expect the magnitude of these 

effects to be significant. 

Changes in the costs of advising both 

SBIC and non-SBIC private funds, as 

described above, could have several 

competitive effects. First, to the extent 

that non-SBIC private fund advisers find 

it profitable to enter the market for 

SBICs under the amendments, the 

amendments might increase 

competition in that market, resulting in 

reduced profits for SBIC advisers and 

lower advisory fees for their SBICs and 

their investors. Similarly, to the extent 

that SBIC advisers find it profitable to 

enter the non-SBIC private fund 

advisory market, the amendments might 

increase competition in that market, 

resulting in reduced profits for nonSBIC private fund advisers and lower 

advisory fees for their non-SBIC private 

funds and their investors. Whether the 

amendments result in such a 

reallocation of advisory services 

depends on whether advisers find it 

profitable to expand operations into 

new markets and whether they can do 

so without changing the quality or 

quantity of services in current markets. 

While we cannot precisely estimate the 

relative likelihood of the above 

competitive effects, the fact that the 

market for SBIC advisers is an order of 

magnitude smaller than the market for 

non-SBIC private fund advisers suggests 

that non-SBIC private fund advisers are 

more likely to have benefitted from 

expanding into the SBIC market 

following the FAST Act’s enactment, 

thereby increasing the amount of 

competition in that market. As 

discussed above, it is likely that most 

advisers would have already exercised 

this option under the baseline if it was 

in their economic interest to do so. 

Therefore, the competitive effects of the 

amendments are not likely to be 

significant. 

Any relative shift of advisory talent 

from one segment of the market to 

another could also have effects on 

efficiency and capital formation. To the 

extent that advisers who expand into 

new markets as a result of the 

amendments possess skill in identifying 

investment opportunities, an increase in 

the supply of advisers in the SBIC or 

non-SBIC private fund markets, or both, 

could result in more efficient 

investment decisions and market prices 

that more accurately reflect the 

fundamental value of assets where 

applicable. Also, any increase in the 

number of advisers in the SBIC market 

could make more capital available to 

small businesses if the increased supply 

of SBIC advisers attracts more capital to 

that market. In addition, to the extent 

that there are economies of scale in the 

provision of advisory services, advisory 

services may be provided at lower 

aggregate cost if the amendments result 

in an expansion of advisers in either the 

SBIC or non-SBIC private fund market. 

To the extent that the amendments 

result in reduced transparency into 

advisers because they opt to switch from 

registered to exempt reporting status, 

and to the extent that investors rely on 

that transparency when making 

investment decisions, the amendments 

might cause a reduction in the 

efficiency of investor allocations to 

these advisers. Any reduction in 

transparency could also reduce the 

aggregate amount of capital managed by 

investment advisers if investors cannot 

find suitable registered investment 

advisers as replacements and these 

investors value transparency more than 

any benefits, such as potentially lower 

advisory fees, of the amendments. 

Finally, if the amendments increase the 

supply of investment advisers to SBICs 

and non-SBIC private funds, and these 

advisers attract assets that were not 

already invested in other markets, they 

may increase the aggregate amount of 

capital investment. 

V. Paperwork Reduction Act Analysis 

As discussed in the Proposing 

Release, we do not believe that the 

amendments to reflect changes made by 

the FAST Act make any substantive 

modifications to any existing collection 

of information requirements or impose 

any new substantive recordkeeping or 

information collection requirements 


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1302 Federal Register / Vol. 83, No. 8 / Thursday, January 11, 2018 / Rules and Regulations 

48 44 U.S.C. 3501 et seq. 

49The most recent Paperwork Reduction Act 

analysis for Form ADV is based upon the number 

of registered advisers and exempt reporting advisers 

as of May 1, 2016. Because approximately five 

months had passed between the signing of the 

FAST Act and May 1, 2016, we believe that most 

of the advisers who wanted to change their 

registration status as a result of the FAST Act, did 

so in that five month period and are therefore 

included in the most recent Paperwork Reduction 

Act analysis for Form ADV. Form ADV under the 

Investment Advisers Act of 1940 (OMB Control No. 

3235–0049). 

50See Section IV above. In the Proposing Release, 

we requested comment on whether our belief that 

the amendments would not impose substantive new 

burdens on the overall population of respondents 

or affect the current over all burden estimates for 

the affected forms was correct. We did not receive 

any responses to our request for comment. 

51 5 U.S.C. 603(b). 

52Under Commission rules, for the purposes of 

the Advisers Act and the Regulatory Flexibility Act, 

an investment adviser generally is a small entity if 

it: (i) Has assets under management having a total 

value of less than $25 million; (ii) did not have total 

assets of $5 million or more on the last day of its 

most recent fiscal year; and (iii) does not control, 

is not controlled by, and is not under common 

control with another investment adviser that has 

assets under management of $25 million or more, 

or any person (other than a natural person) that had 

total assets of $5 million or more on the last day 

of its most recent fiscal year. Rule 0–7(a) (17 CFR 

275.0–7(a)). 

within the meaning of the Paperwork 

Reduction Act of 1995.48

The amendments to reflect the 

changes made by the FAST Act as 

described in Section II above may shift 

the number of advisers between each 

class of advisers as well as include 

advisers solely to SBICs that take on 

additional non-SBIC venture capital 

fund or private fund clients and 

therefore would become exempt 

reporting advisers. 

We believe that the current burden 

and cost estimates for the existing 

collection of information requirements 

remain appropriate.49 Thus, we believe 

that the amendments should not impose 

substantive new burdens on the overall 

population of respondents or affect the 

current overall burden estimates for the 

affected forms.50 Accordingly, we are 

not revising any burden and cost 

estimates in connection with these 

amendments. 

VI. Regulatory Flexibility Act 

Certification 

The Commission certified, pursuant 

to section 605(b) of the Regulatory 

Flexibility Act of 1980 51 that the 

proposed amendments to Advisers Act 

rules 203(l)–1 and 203(m)–1, if adopted, 

would not have a significant economic 

impact on a substantial number of small 

entities.52 We included this certification 

in Section V of the Proposing Release. 

Although we encouraged written 

comments regarding this certification, 

no commenters responded to this 

request. 

VII. Statutory Authority 

The Commission is amending rule 

203(l)–1 under the authority set forth in 

sections 211(a) and 203(l) of the 

Advisers Act, (15 U.S.C. 80b–11(a) and 

80b–3(l), respectively). The Commission 

is amending rule 203(m)–1 under the 

authority set forth in sections 211(a) and 

203(m) of the Advisers Act (15 U.S.C. 

80b–11(a) and 80b–3(m), respectively). 

List of Subjects in 17 CFR Part 275 

Reporting and recordkeeping 

requirements, Securities. 

Text of Rule Amendments 

For the reasons set forth in the 

preamble, the Commission amends title 

17, chapter II of the Code of Federal 

Regulations as follows. 

PART 275—RULES AND 

REGULATIONS, INVESTMENT 

ADVISERS ACT OF 1940 

■ 1. The authority citation for part 275 

continues to read, in part, as follows: 

Authority: 15 U.S.C. 80b–2(a)(11)(G), 80b– 

2(a)(11)(H), 80b–2(a)(17), 80b–3, 80b–4, 80b– 

4a, 80b–6(4), 80b–6a, and 80b–11, unless 

otherwise noted. 

* * * * * 

■ 2. Amend § 275.203(l)–1 by revising 

the introductory text to paragraph (a) to 

read as follows: 

§ 275.203(l)–1 Venture capital fund 

defined. 

(a) Venture capital fund defined. For 

purposes of section 203(l) of the Act (15. 

U.S.C. 80b–3(l)), a venture capital fund 

is any entity described in subparagraph 

(A), (B), or (C) of section 203(b)(7) of the 

Act (15 U.S.C. 80b–3(b)(7)) (other than 

an entity that has elected to be regulated 

or is regulated as a business 

development company pursuant to 

section 54 of the Investment Company 

Act of 1940 (15 U.S.C. 80a–53)) or any 

private fund that: 

* * * * * 

■ 3. Amend § 275.203(m)–1 by revising 

paragraph (d)(1) to read as follows: 

§ 275.203(m)–1 Private fund adviser 

exemption. 

* * * * * 

(d) * * * 

(1) Assets under management means 

the regulatory assets under management 

as determined under Item 5.F of Form 

ADV (§ 279.1 of this chapter) except that 

the regulatory assets under management 

attributable to a private fund that is an 

entity described in subparagraph (A), 

(B), or (C) of section 203(b)(7) of the Act 

(15 U.S.C. 80b–3(b)(7)) (other than an 

entity that has elected to be regulated or 

is regulated as a business development 

company pursuant to section 54 of the 

Investment Company Act of 1940 (15 

U.S.C. 80a–53)) shall be excluded from 

the definition of assets under 

management for purposes of this 

section. 

* * * * * 

By the Commission. 

Dated: January 5, 2018. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–00299 Filed 1–10–18; 8:45 am] 

BILLING CODE 8011–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R01–OAR–2017–0266; FRL–9972–90– 

Region 1] 

Air Plan Approval; NH; Approval of 

Recordkeeping and Reporting 

Requirements and Single Source 

Order; Withdrawal of Direct Final Rule 

AGENCY: Environmental Protection 

Agency. 

ACTION: Withdrawal of direct final rule. 

SUMMARY: Due to the receipt of adverse 

comments, the Environmental 

Protection Agency (EPA) is withdrawing 

the November 14, 2017 direct final rule 

approving State Implementation Plan 

(SIP) revisions submitted by the State of 

New Hampshire. New Hampshire’s SIP 

revisions modified existing 

recordkeeping and reporting 

requirements for sources of air 

pollution, and modified an existing 

order for Sturm Ruger & Company. This 

action is being taken in accordance with 

the Clean Air Act. 

DATES: The direct final rule published at 

82 FR 52664 on November 14, 2017 is 

withdrawn effective January 11, 2018. 

FOR FURTHER INFORMATION CONTACT: Bob 

McConnell, Air Quality Planning Unit, 

U.S. Environmental Protection Agency, 

New England Regional Office, 5 Post 

Office Square, Suite 100 (Mail code 

OEP05–2), Boston, MA 02109—3912, 

telephone (617) 918–1046, facsimile 

(617) 918–0146, email: 

mcconnell.robert@epa.gov. 

SUPPLEMENTARY INFORMATION: In the 

direct final rule, EPA stated that if 

adverse comments were submitted by 

December 14, 2017, the rule would be 

withdrawn and not take effect. EPA 

received adverse comments prior to the 

close of the comment period and, 


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