Monday, June 22, 2009

Update: Private Fund Transparency Act of 2009

On June 16, 2009, Senator Jack Reed (D-RI) introduced the Private Fund Transparency Act of 2009, which would require, among other things, certain investment advisers to private funds, including hedge funds and private equity funds, to register with the SEC. According to Senator Reed, "these statutory changes will help modernize our outdated financial regulatory system, protect investors, and prevent fraud." The proposed statutory changes would eliminate the "private adviser exemption" and require all hedge fund and other investment pool advisers that manage more than $30 million in assets to register as investment advisers with the SEC. However, a limited exemption from registration is created for a "foreign private adviser," which is any investment adviser who (i) has no place of business in the U.S., (ii) during the preceding 12 months has had fewer than 15 clients in the U.S. and assets under management attributable to clients in the U.S. of less than $25 million, and (iii) neither holds itself out to the public as an investment adviser, nor acts as an investment adviser to any registered investment company.

Full Text of the Act
Press Release of Sen. Reed