Bart Mallon, Esq. (http://www.hedgefundlawblog.com)
Private Equity Funds Not Excluded
Today the House Financial Services Committee voted to require hedge fund managers to register with the Securities and Exchange Commission. While private equity firms are also required to register under the proposed bill, managers to venture capital funds are excluded from this registration requirement.
The bill will next be presented to the House of Representatives and if it passes there it will move onto the Senate and eventually to President Obama to sign into law. The name of the bill is the Private Fund Investment Advisers Registration Act of 2009. For the full text please see H.R. 3818.
For Immediate Release: October 27, 2009
Committee Approves Private Advisor Registration Bill with Bipartisan Support
Washington, DC – Today, the House Financial Services Committee passed H.R. 3818, the Private Fund Investment Advisers Registration Act, introduced by Congressman Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises. The Committee passed H.R. 3818 with extensive bipartisan support by a vote of 67-1. Tomorrow, the Committee is expected to vote on Chairman Kanjorski’s H.R. 3817, the Investor Protection Act and H.R. 3890, the Accountability and Transparency in Rating Agencies Act.
“The Private Fund Investment Advisers Registration Act, which passed today with wide-ranging bipartisanship support, will force many more financial providers to register with the Securities and Exchange Commission,” said Chairman Kanjorski. “The past year has shown that the deregulation or in many cases, lack of regulation, of financial firms is an idea of the past. Advisors to financial firms must receive government oversight and we must understand the assets of financial firms, including for hedge funds, private equity firms, and other private pools of capital. Under this legislation, private investment funds would become subject to more scrutiny by the SEC and take more responsibility for their actions. I look forward to moving this legislation to the House floor for a vote.”
A summary of H.R. 3818 follows:
- Everyone Registers. Sunlight is the best disinfectant. By mandating the registration of private advisers to private pools of capital regulators will better understand exactly how those entities operate and whether their actions pose a threat to the financial system as a whole.
- Better Regulatory Information. New recordkeeping and disclosure requirements for private advisers will give regulators the information needed to evaluate both individual firms and entire market segments that have until this time largely escaped any meaningful regulation, without posing undue burdens on those industries.
- Level the Playing Field. The advisers to hedge funds, private equity firms, single-family offices, and other private pools of capital will have to obey some basic ground rules in order to continue to play in our capital markets. Regulators will have authority to examine the records of these previously secretive investment advisers.
- Investment Adviser Registration
- Investment Adviser Overview
- Proposed Investment Adviser Custody Rule
- Investment Adviser Pay to Play Rules (Proposed)
- Investment Adviser Compliance Conference
- Inspector General Madoff Report
- Series 65 Exam
- Investment Adviser Books and Records Requirement
Bart Mallon, Esq. of Cole-Frieman & Mallon LLP runs Hedge Fund Law Blog and can be reached directly at 415-868-5345.