The Securities and Exchange Commission (SEC) has outlined its proposed framework for regulating hedge fund managers, implementing the provisions of the Dodd-Frank Act on financial reform.

Hedge fund managers with over $150 million in assets will have to register with the SEC and provide regulators with more information about their businesses, including details of the type investors of their funds.

Hedge funds will also have to provide the SEC with names of their service providers, such as prime brokers, auditors, administrators and outside marketers.

The SEC also wants hedge funds to disclose business practices that may present significant conflicts of interest, such as the use of affiliated brokers, soft dollar arrangements and compensation for client referrals.

Fund managers with less than $150 million in assets are not required to register with the SEC but they will still have to complete certain sections of the registration form and provide the regulator with basic information about their funds.

The SEC also proposed raising the asset threshold to register with the agency to $100 million. Fund managers with $25 million to $100 million in assets will have to register with the authorities in the state where they have their main office.

Hedge fund managers with $100 million to $150 million in assets appear to be in a regulatory limbo. They are not required to register with state or federal agencies, although they may still voluntarily register with the SEC.

The proposed regulations also provide an exemption from registration and reporting for foreign hedge fund managers without a place of business in the US and less than 15 US clients and/or under $25 million in assets from US investors.

The SEC registration requirement becomes effective on July 21, 2011.

SEC commissioners voted four to one to approve the rules on a preliminary basis. The proposals are subject to a 45-day comment period before a final vote on implementing the rules.