Tag Archives: manager registration

Hedge Fund Adviser Registration Act of 2009

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Congressional Bill Proposed in House

In January we gave significant attention to the Hedge Fund Transparency Act of 2009 and we did not focus at all on a similar bill introduced in the House of Representatives.   The Hedge Fund Adviser Registration Act of 2009, introduced on January 27, would change the Investment Advisers Act of 1940 to require those managers with more than $30 million in assets to register as investment advisors with the SEC (for background, please see 203(b)(3) exemption).  The Hedge Fund Transparency Act takes a decidedly different route to regulation – it would require hedge fund managers, under the Investment Company Act of 1940 , to register as investment advisors and it would also require hedge funds to submit certain information to the SEC.

The fate of both of these bills is currently in question.  It seems as though Congress and the SEC are waiting for President Obama and Treasury Secretary Geithner to develop a plan for a comprehensive regulatory system.  While we remain in this holding pattern it seems likely that any regulatory changes are months and months away.

The full text of the Registration Act are reprinted below along with a press release announcing the proposed measure.  Other related hedge fund law articles include:

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Hedge Fund Adviser Registration Act of 2009 (Introduced in House)

HR 711 IH

111th CONGRESS

1st Session

H. R. 711

To amend the Investment Advisers Act of 1940 to remove the registration exception for certain investment advisors with less than 15 clients.

IN THE HOUSE OF REPRESENTATIVES

January 27, 2009

Mr. CAPUANO (for himself and Mr. CASTLE) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To amend the Investment Advisers Act of 1940 to remove the registration exception for certain investment advisors with less than 15 clients.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Hedge Fund Adviser Registration Act of 2009′.

SEC. 2. REMOVAL OF THE PRIVATE ADVISOR EXEMPTION.

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) is amended by striking subsection (b)(3).

Source

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PRESS RELEASE

Capuano, Castle Bill Would Improve Oversight of Hedge Funds

Requires money managers to register with SEC

January 27, 2009

Washington, DC — Today, Reps. Mike Castle (R-DE) and Mike Capuano (D-MA), introduced bipartisan legislation that is intended to close a loophole created in the Investment Advisors Act of 1940, which exempts hedge fund managers from registering with the Securities and Exchange Commission (SEC) if they have less than 15 clients. The Hedge Fund Managers Registration Act, would require anyone who manages hedge funds to register with the SEC, and therefore improves federal oversight of these investments.

“This measure would require all hedge fund managers to register with the SEC so that their actions on behalf of investors are transparent,” said Rep. Capuano. “I have long advocated this simple step as a way to better understand how hedge fund managers are operating, and how they are investing the resources of their clients. In addition to providing us with basic census information on hedge funds, this measure can be used to detect and deter fraudulent practices and risky behavior before it’s too late.”

“Hedge funds are a $1.5 trillion industry that account for roughly 30 percent of U.S. stock trading, but also have tremendous presence in other areas of our markets. Without greater attention and oversight to protect investors from fraud, hedge funds pose systemic risk to our economy,” said Rep. Castle, senior member on the House Financial Services Committee. “As we work to help regain our economic health, I believe we can and should scrutinize money managers more carefully and begin to reclaim some order in equity markets. I am hopeful that this legislation will work as a tool to help protect investors from becoming victims. This is the first in a series of reforms I intend to strongly advocate in the coming months.”

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Contact: Alison M. Mills (617) 621-6208
Contact: Stephanie Fitzpatrick (202) 225-4165 (Rep. Castle)