PRIVATE CAPITAL AND INVESTMENT GROUP ALERT: Update on House of Representatives Investment Adviser Registration Legislation and Other Developments Affecting Investment Advisers

    View Author 15 December 2009

    On December 10, 2009, the U.S. House of Representatives approved “The Wall Street Reform and Consumer Protection Act of 2009” (Wall Street Reform Act), which was introduced by Representative Barney Frank (D-MA). It is a comprehensive financial regulatory reform proposal containing a number of components aimed at reforming various facets of the financial services industry, among which is the “Private Fund Investment Advisers Registration Act of 2009” (House Bill). The House Bill is unrelated to similarly-named legislative initiatives introduced in recent months1 and discussed in our Alerts issued earlier this fall (September, October and November).

    Among the primary elements of the House Bill, this Alert discusses the following: 

    • Elimination of the private fund adviser exemption from registration. 
    • Collection of specific types of data from investment advisers and the funds they manage. 
    • Non-disclosure and confidentiality obligations of the Securities and
    • Exchange Commission (SEC) with respect to proprietary information of investment advisers and the funds they manage. 
    • Registration and reporting exemptions for investment advisers to venture capital funds. 
    • Registration and reporting exemptions for certain investment advisers to private funds, as well as registration and examination requirements for advisers to “mid-sized” private funds. 
    • SEC’s periodic determinations of new dollar amount thresholds for determining investor eligibility. 
    • Annual fees imposed on registered investment advisers to help recover the cost of inspections and examinations of such registered advisers.