SEC RULE 203(b)(3)-1

17 C.F.R. § 275.203b3-1 (1990)

Preliminary Notes

1. This rule is a safe harbor and is not intended to specify the exclusive method for a limited partnership, rather than each limited partner, to be counted as a "client" for purposes of section 203(b)(3) of the Act. The rule is not intended to create any presumptions about the status of any person not relying, or unable to rely, on the rule.

2. Any person relying on this rule is reminded that section 208(d) of the Act makes it unlawful generally for such person to do indirectly, or through any other person, any act which it would be unlawful for such person to do directly under the Act or the rules thereunder. The fact that a person relying on this rule is related to a registered investment adviser is not sufficient, in and of itself, to preclude reliance on the rule. However, absent the separate and distinct operation of a registered adviser from a person relying on this rule, section 208(d) requires the two entities to be viewed as a single entity for purposes of section 203(b)(3) of the Act.

(a) As used in this section:

(1) A "related person" of another person is any person controlling, controlled by, under common control with, or any employee or employer of, such other person; and

(2) A limited partner is an "investment advisory client" of a general partner or other person acting as investment adviser to the partnership, or any related person of the foregoing persons, if the limited partner receives from any such person

(i) investment advisory services of a nature that the person providing the services would be an investment adviser, as defined in section 202(a)(11) of the Act, or

(ii) investment advice to transfer its assets from one limited partnership to another one; Provided, however, That a limited partner is not an investment advisory client of a person solely because such person offers, promotes, or sells interests in the limited partnership to the limited partner or reports periodically to the limited partners as a group solely with respect to the performance of, or the plans for, the partnership's assets (or similar matters).

(b) For purposes of section 203(b)(3) of the Act:

(1) A limited partnership shall be counted as a client of any general partner or other person acting as investment adviser to the partnership; and

(2) A limited partner of the partnership shall not be counted as a client of the general partner or other person acting as investment adviser to the partnership if:

(i) The limited partnership interests are securities; and

(ii) The general partner or other person provides investment advice to the partnership based on the investment objectives of the limited partnership.

(3) Paragraph (b)(2) of this section shall not be available with respect to any limited partner who is, separate and apart from its status as a limited partner, an investment advisory client of

(i) a general partner or other person acting as investment adviser to the partnership, or

(ii) any related person thereof. The fact that paragraph (b)(2) of this section is not available with respect to a particular limited partner shall not affect the availability of that paragraph with respect to any other limited partner otherwise complying with paragraph (b)(2) of this section.

(c) Any person relying on this rule shall not be deemed to be holding itself out generally to the public as an investment adviser, within the meaning of section 203(b)(3), solely because it participates in a non-public offering of limited partnership interests under the Securities Act of 1933.