The Role of the Exempt Reporting Adviser: What Emerging Fund Managers Need to Know

October 2024

If you’re launching your first private fund, you may be wondering whether you need to register with the SEC. In many cases, the answer is no — at least not yet. That’s where the Exempt Reporting Adviser, or ERA, status comes in.

At Moeller Law PLLC, we help emerging fund managers understand and use the ERA designation effectively. Serving as outsourced general counsel, we don’t just file forms. We coordinate across your legal, tax, compliance, and operational teams to make sure your advisory business is built for growth and stays within the guardrails.

What Is an ERA?

An Exempt Reporting Adviser is an investment adviser that meets certain conditions to avoid full SEC registration. You may qualify if you advise only private funds, keep U.S. assets under management below $150 million, and don’t market to the public as an adviser. Many early-stage fund managers fall squarely into this category.

However, qualifying for ERA status doesn’t mean you're free from regulation. You’re still subject to antifraud rules, must file a version of Form ADV, and may be subject to state-specific notice filings or compliance requirements, depending on where you’re located and where your investors reside.

What Are the Requirements?

ERAs must file Form ADV Part 1 electronically through the Investment Adviser Registration Depository (IARD). This filing discloses basic information about your firm, fund structures, ownership, and control persons. While you don’t need to submit a full Part 2 brochure, you are still responsible for keeping your filing current and accurate.

Even if you qualify as an ERA at the federal level, some states require additional filings, audits, or even full registration based on AUM or the number of investors. At Moeller Law PLLC, we review your structure, investor base, and business model to identify whether additional obligations apply. We also coordinate with compliance vendors or state-specific counsel when necessary.

Common Mistakes to Avoid

Fund managers often treat ERA status as a one-time checkbox. In reality, it requires ongoing attention. Missing an ADV update or ignoring a material change in your business structure could result in a compliance violation. Additionally, we frequently see managers forget to evaluate their adviser registration status when launching a second fund, increasing AUM, or adding separately managed accounts.

We help clients build scalable structures from the start, flagging when exemptions may no longer apply and helping ensure a smooth transition to registration if or when it becomes necessary.

ERA Isn’t Forever — Plan for What Comes Next

Many firms start with ERA status, but few stay there indefinitely. As you grow and approach the $150 million threshold or expand beyond private fund clients, the exemption no longer applies. Registration with the SEC — or potentially with a state — becomes necessary.

Moeller Law PLLC helps managers prepare for this shift well in advance. That includes developing written policies, preparing for Part 2 disclosures, and evaluating whether internal or external CCO support is needed. Our goal is to help clients scale thoughtfully, with legal and compliance infrastructure that grows alongside the business.

Final Thoughts

ERA status offers flexibility for emerging fund managers, but it comes with its own rules, filing requirements, and limitations. It is not a loophole, and it’s not permanent. Staying in compliance — and knowing when the rules change — requires more than just a one-time filing.

Moeller Law PLLC provides outsourced general counsel support to private fund advisers, helping manage filings, assess exemptions, and prepare for what comes next. If you’re unsure whether ERA status fits your structure, or need help staying compliant, reach out to us.