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Form ADV Part 1A Item 2B(3) · Answer type: yn · Item 2 - SEC Registration
Item 2B(3) asks whether the firm acts solely as an adviser to private funds but is no longer eligible to check box 2B(2) because it has assets under management in the United States of $150 million or more.
This checkbox captures the transition period when private fund advisers outgrow the exempt reporting threshold in Item 2B(2). The firm continues to manage only private funds but now exceeds the $150 million U.S. AUM limit that allows exempt reporting adviser status.
Firms marking Yes typically need to register as full SEC-registered investment advisers, accepting additional compliance obligations, examination requirements, and disclosure responsibilities. This represents a significant regulatory transition for growing private fund managers.
The $150 million threshold applies only to U.S. assets under management. Global AUM may be substantially higher, but the U.S. component determines exempt reporting eligibility. This reflects the SEC's jurisdiction over U.S. investor assets.
Transitioning private fund advisers often face complex decisions about regulatory structure, compliance systems, and operational changes needed to meet full registration requirements.
Yes
The firm reports that it manages only private funds but has U.S. AUM of $150 million or more, disqualifying it from Item 2B(2) exempt status.
No
The firm does not claim this transitional status - it may still qualify for 2B(2) exemption, serve other client types, or register under different paths.
2B(3) - Act solely as an adviser to private funds but you are no longer eligible to check box 2B(2) because you have assets under management in the United States of $150 million or more (Yes / No).
This appears in Item 2, SEC Registration, under the exempt reporting adviser section 2B.
This transition status indicates a growing private fund manager that faces changing regulatory requirements. The firm must adapt compliance systems, reporting processes, and operational procedures to meet full SEC registration obligations.
The growth beyond $150 million suggests successful fund management and investor attraction, but also brings increased regulatory scrutiny and compliance costs. This can affect fund economics and operational focus.
However, reaching this threshold does not guarantee continued growth or superior investment performance. Some private fund advisers may fluctuate around the $150 million level due to market conditions or investor redemptions.
The status also does not reveal specific fund strategies, performance records, or reasons for growth. Private fund advisers may reach this threshold through different paths including new fund launches, existing fund growth, or investor additions.
Use 2B(3) as a signal of operational transition and regulatory complexity. This matters for private fund investors evaluating managers in periods of regulatory change.
Yes
The firm reports transitional private fund adviser status under Item 2B(3). On Best Investors, confirm that regulatory AUM in Item 5F(2)(c) reflects the $150 million or higher U.S. threshold mentioned in the question.
Check the ADV filing date to understand how recently this transition occurred. Recent transitions may indicate ongoing adjustments to compliance systems and operational procedures.
Review client types in Item 5D to verify that the firm continues to serve only private fund categories without individual or institutional non-fund clients that would change the regulatory analysis.
Look at services in Item 5G for any expansion beyond core portfolio management that might accompany the firm's growth and regulatory transition.
Monitor subsequent filings to see whether the firm maintains this status or transitions to standard large adviser registration under Item 2A(1).
No
The firm does not claim this transitional status. Check Item 2B(2) for continued exempt reporting eligibility, or Item 2A categories if the firm has transitioned to full registration or serves broader client types.