Monday, October 5, 2009

Congressman Proposes Private Fund Registration Act

On October 1, 2009, House Representative Paul E. Kanjorski, Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, released a discussion draft of legislation to regulate private advisers to hedge funds and other private pools of capital. The draft bill, called the "Private Fund Investment Advisers Registration Act of 2009" (the "Bill"), substantially mirrors the fund adviser legislation, introduced by the Obama Administration in July.

However, in contrast to the Obama Administration proposal, the Bill would exempt "venture capital fund" advisers from registration with the SEC under the Investment Advisers Act of 1940. The SEC would then be required to identify and define what constitutes a "venture capital fund" for purposes of the exemption.