Rule 3(c)(1) concerns which scenario?

• A. An adviser with discretion over more than 100 accounts using pooled client funds might be considered to be running an investment company
• B. An adviser with a single account
• C. An adviser using separate accounts
• D. An adviser with non-pooled funds

Answer: (A)

Rule 3(c)(1) sets an exemption for private funds from registering as investment companies, but only if the pool has 100 or fewer beneficial owners. When an adviser has discretion over pooled client funds and that pool includes more than 100 accounts, the fund would exceed the 100-owner limit and would be treated as an investment company, requiring registration. So the scenario describing discretion over pooled funds with more than 100 accounts is exactly what Rule 3(c)(1) governs. The other options don’t create a pooled private fund with many owners, so they don’t fit this rule.