California is looking to require hedge funds and private equity firms to register as investment advisors, reports. The California Department of Corporations would achieve this by canceling a rule that has exempted those types of organizations from having to register.

California would also require out-of-state hedge funds and private equity firms that have more than six clients in the state to register. However, California is defining client as a fund.

All venture capital firms would continue to be exempt.

California said it agreed with the Securities and Exchange Commission’s hedge fund registration rule that the SEC passed in 2004 but that a hedge fund manager successfully overturned through a lawsuit.

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