It's no secret that investment advisers to hedge funds, private equity, and other private funds have been subjected to intense regulatory scrutiny of late. Yet, until recently, most were not required to register under the Investment Advisers Act and were not subject to any of its rules.

Enter the market crisis of 2008.

In the fallout, Dodd-Frank amended the Act, ushering in a new world of government oversight for private fund advisers-a world fraught with pitfalls

Among other things, fund advisers are expected to adopt compliance programs to meet the requirements of innumerable...