HR 3818 IH

To amend the Investment Advisers Act of 1940 to require advisers of certain unregistered investment companies to register with and provide information to the Securities and Exchange Commission, and for other purposes.CommentsClose CommentsPermalink

October 15, 2009CommentsClose CommentsPermalink

Mr. KANJORSKI introduced the following bill; which was referred to the Committee on Financial ServicesCommentsClose CommentsPermalink

To amend the Investment Advisers Act of 1940 to require advisers of certain unregistered investment companies to register with and provide information to the Securities and Exchange Commission, and for other purposes.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Private Fund Investment Advisers Registration Act of 2009’. CommentsClose CommentsPermalink

SEC. 2. DEFINITIONS.

Section 202(a) of the Investment Advisers Act of 193440 (15 U.S.C. 80b-2(a)) is amended by adding at the end the following new paragraphs: CommentsClose CommentsPermalink





‘(29) PRIVATE FUND- The term ‘private fund’ means an investment fundssuer that --‘(A) would be an investment company under section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(a)) but for the exception provided from that definition by either section 3(c)(1) or section 3(c)(7) of such Act CommentsClose CommentsPermalink





; and

‘(B) either--

‘(i) is organized or otherwise created under the laws of the United States or of a State; or

‘(ii) has 10 percent or more of its outstanding securities by value owned by United States persons.

‘(30) FOREIGN PRIVATE FUND ADVISER- The term ‘foreign private fund adviser’ means an investment adviser who-- CommentsClose CommentsPermalink




‘(A) has no place of business in the United States; CommentsClose CommentsPermalink





‘(B) during the preceding 12 months has had-- CommentsClose CommentsPermalink





‘(i) fewer than 15 clients in the United States; and CommentsClose CommentsPermalink





‘(ii) assets under management attributable to clients in the United States of less than $25,000,000, or such higher amount as the Commission may, by rule, deem appropriate in the public interest or for the protection of investors; and CommentsClose CommentsPermalink





‘(C) neither holds itself out generally to the public in the United States as an investment adviser, nor acts as an investment adviser to any investment company registered under the Investment Company Act of 1940, or a company which has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a-53) and has not withdrawn such election.’. CommentsClose CommentsPermalink

SEC. 3. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED EXEMPTION FOR FOREIGN PRIVATE FUND ADVISERS; LIMITED INTRASTATE EXEMPTION.

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





(1) in paragraph (1), by inserting ‘, except an investment adviser who acts as an investment adviser to any private fund,’ after ‘any investment adviser’; CommentsClose CommentsPermalink





(2) by amending paragraph (3) to read as follows: CommentsClose CommentsPermalink





‘(3) any investment adviser that is a foreign private fund adviser;’; CommentsClose CommentsPermalink





(3) in paragraph (5), by striking ‘or’ at the end; CommentsClose CommentsPermalink





and(4) in paragraph (6)-- CommentsClose CommentsPermalink





(A) in subparagraph (A), by striking ‘or’; CommentsClose CommentsPermalink





(B) in subparagraph (B), by striking the period at the end and adding ‘; or’; and CommentsClose CommentsPermalink





(C) by adding at the end the following new subparagraph: CommentsClose CommentsPermalink





‘(C) a private fund; or’; and CommentsClose CommentsPermalink





(5) by adding at the end the following: CommentsClose CommentsPermalink





‘(7) any investment adviser who solely advises-- CommentsClose CommentsPermalink





‘(A) small business investment companies licensed under the Small Business Investment Act of 1958; CommentsClose CommentsPermalink





‘(B) entities that have received from the Small Business Administration notice to proceed to qualify for a license, which notice or license has not been revoked; or CommentsClose CommentsPermalink





‘(C) applicants, related to one or more licensed small business investment companies covered in subparagraph (A), that have applied for another license, which application remains pending.’. CommentsClose CommentsPermalink

SEC. 4. COLLECTION OF SYSTEMIC RISK DATA.

Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-4) is amended-- CommentsClose CommentsPermalink





(1) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively; and CommentsClose CommentsPermalink





(2) by inserting after subsection (a) the following new subsection: CommentsClose CommentsPermalink





‘(b) Records and Reports of Private Funds- CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Commission is authorized to require any investment adviser registered under this Act to maintain such records of and file with the Commission such reports regarding private funds advised by the investment adviser as are necessary or appropriate in the public interest and for the protection of investors or for the assessment of systemic risk as the Commission determines in consultation with the Board of Governors of the Federal Reserve System. The Commission is authorized to provide or make available to the Board of Governors of the Federal Reserve System, and to any other entity that the Commission identifies as having systemic risk responsibility, those reports or records or the information contained therein. The records and reports of any private fund, to which any such investment adviser provides investment advice, maintained or filed by an investment adviser registered under this Act, shall be deemed to be the records and reports of the investment adviser. CommentsClose CommentsPermalink





‘(2) REQUIRED INFORMATION- The records and reports required to be maintained or filed with the Commission under this subsection shall include, for each private fund advised by the investment adviser-- CommentsClose CommentsPermalink





‘(A) the amount of assets under management; CommentsClose CommentsPermalink





‘(B) the use of leverage (including off-balance sheet leverage); CommentsClose CommentsPermalink





‘(C) counterparty credit risk exposures; CommentsClose CommentsPermalink





‘(D) trading and investment positions; CommentsClose CommentsPermalink





‘(E) trading practices; and CommentsClose CommentsPermalink





‘(F) such other information as the Commission, in consultation with the Board of Governors of the Federal Reserve System, determines necessary or appropriate in the public interest and for the protection of investors or for the assessment of systemic risk. CommentsClose CommentsPermalink





‘(3) OPTIONAL INFORMATION- The Commission may require the reporting of such additional information from private fund advisers as the Commission determines necessary. In making such determination, the Commission, taking into account the public interest and potential to contribute to systemic risk, may set different reporting requirements for different classes of private fund advisers, based on the particular types or sizes of private funds advised by such advisers. CommentsClose CommentsPermalink





‘(4) MAINTENANCE OF RECORDS- An investment adviser registered under this Act is required to maintain and keep such records of private funds advised by the investment adviser for such period or periods as the Commission, by rule or regulation, may prescribe as necessary or appropriate in the public interest and for the protection of investors or for the assessment of systemic risk. CommentsClose CommentsPermalink





‘(5) EXAMINATION OF RECORDS- CommentsClose CommentsPermalink





‘(A) PERIODIC AND SPECIAL EXAMINATIONS- All records of a private fund maintained by an investment adviser registered under this Act shall be subject at any time and from time to time to such periodic, special, and other examinations by the Commission, or any member or representative thereof, as the Commission may prescribe. CommentsClose CommentsPermalink





‘(B) AVAILABILITY OF RECORDS- An investment adviser registered under this Act shall make available to the Commission or its representatives any copies or extracts from such records as may be prepared without undue effort, expense, or delay as the Commission or its representatives may reasonably request. CommentsClose CommentsPermalink





‘(6) INFORMATION SHARING- The Commission shall make available to the Board of Governors of the Federal Reserve System, and to any other entity that the Commission identifies as having systemic risk responsibility, copies of all reports, documents, records, and information filed with or provided to the Commission by an investment adviser under this subsection as the Board, or such other entity, may consider necessary for the purpose of assessing the systemic risk of a private fund. All such reports, documents, records, and information obtained by the Board, or such other entity, from the Commission under this subsection shall be kept confidential in a manner consistent with confidentiality established by the Commission pursuant to paragraph (8). CommentsClose CommentsPermalink





‘(7) DISCLOSURES OF CERTAIN PRIVATE FUND INFORMATION- An investment adviser registered under this Act shall provide such reports, records, and other documents to investors, prospective investors, counterparties, and creditors, of any private fund advised by the investment adviser as the Commission, by rule or regulation, may prescribe as necessary or appropriate in the public interest and for the protection of investors or for the assessment of systemic risk. CommentsClose CommentsPermalink





‘(8) CONFIDENTIALITY OF REPORTS- Notwithstanding any other provision of law, the Commission shall not be compelled to disclose any report or information contained therein required to be filed with the Commission under this subsection. Nothing in this paragraph shall authorize the Commission to withhold information from the Congress or prevent the Commission from complying with a request for information from any other Federal department or agency or any self-regulatory organization requesting the report or information for purposes within the scope of its jurisdiction, or complying with an order of a court of the United States in an action brought by the United States or the Commission. For purposes ofsection 552 of title 5, United States Code, this paragraph shall be considered a statute described in subsection (b)(3)(B) of such section.’. CommentsClose CommentsPermalink

SEC. 5. ELIMINATION OF DISCLOSURE PROVISION.

Section 210 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-10) is amended by striking subsection (c). CommentsClose CommentsPermalink

SEC. 6. EXEMPTION OF AND REPORTING BY VENTURE CAPITAL FUND ADVISERS.

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) is amended by adding at the end the following new subsection: CommentsClose CommentsPermalink





‘(l) Exemption of and Reporting by Venture Capital Fund Advisers- The Commission shall identify and define the term ‘venture capital fund’ and shall provide an adviser to such a fund an exemption from the registration requirements under this section. The Commission shall (excluding any such fund whose adviser is exempt from registration pursuant to paragraph (7) of subsection (b)). The Commission shall require such advisers to maintain such records and provide to the Commission such annual or other reports as the Commission determines necessary or appropriate in the public interest or for the protection of investors.’. CommentsClose CommentsPermalink

SEC. 7. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND ADVISERS.

SEC. 8. CLARIFICATION OF RULEMAKING AUTHORITY.

Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-11) is amended-- CommentsClose CommentsPermalink





(1) by amending subsection (a) to read as follows: CommentsClose CommentsPermalink





‘(a) The Commission shall have authority from time to time to make, issue, amend, and rescind such rules and regulations and such orders as are necessary or appropriate to the exercise of the functions and powers conferred upon the Commission elsewhere in this title, including rules and regulations defining technical, trade, and other terms used in this title. For the purposes of its rules and regulations, the Commission may-- CommentsClose CommentsPermalink





‘(1) classify persons and matters within its jurisdiction based upon, but not limited to-- CommentsClose CommentsPermalink





‘(A) size; CommentsClose CommentsPermalink





‘(B) scope; CommentsClose CommentsPermalink





‘(C) business model; CommentsClose CommentsPermalink





‘(D) compensation scheme; or CommentsClose CommentsPermalink





‘(E) potential to create or increase systemic risk; CommentsClose CommentsPermalink





‘(2) prescribe different requirements for different classes of persons or matters; and CommentsClose CommentsPermalink





‘(3) ascribe different meanings to terms (including the term ‘client’, except the Commission shall not ascribe a meaning to the term ‘client’ that would include an investor in a private fund managed by an investment adviser, where such private fund has entered into an advisory contract with such adviser) used in different sections of this title as the Commission determines necessary to effect the purposes of this title.’; and CommentsClose CommentsPermalink





(2) by adding at the end the following new subsection: CommentsClose CommentsPermalink





‘(e) The Commission and the Commodity Futures Trading Commission shall, after consultation with the Board of Governors of the Federal Reserve System, within 612 months after the date of enactment of the Private Fund Investment Advisers Registration Act of 2009, jointly promulgate rules to establish the form and content of the reports required to be filed with the Commission under sections 203(il) and 204(b) and with the Commodity Futures Trading Commission by investment advisers that are registered both under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) and the Commodity Exchange Act (7 U.S.C. 1 et seq.).’. CommentsClose CommentsPermalink