Private Fund Investment Advisers Registration Act of 2009 - (Sec. 3) Amends the Investment Advisers Act of 1940 to repeal the exemption for, and apply registration requirements to, a private fund investment adviser.
Exempts from such registration requirements, however, any investment adviser who solely advises: (1) small business investment companies licensed under the Small Business Investment Act of 1958; (2) entities that the Small Business Administration (SBA) has notified to proceed to qualify for a license, if the notice or license has not been revoked; or (3) applicants, related to one or more licensed small business investment companies, that have a pending application for another license.
(Sec. 4) Subjects to Securities Exchange Commission (SEC) recordkeeping requirements any registered investment adviser who advises private funds. Authorizes the SEC to make such records, especially those relating to systemic risk, available to the Board of Governors of the Federal Reserve System and any other entity that has systemic risk responsibility.
(Sec. 5) Repeals the declaration that no provision of such Act shall be construed to require, or to authorize the SEC to require, any investment adviser engaged in rendering investment supervisory services to disclose the identity, investments, or affairs of any client, except insofar as such disclosure may be necessary or appropriate in a particular proceeding or investigation having as its object the enforcement of a provision or provisions of the Act. (Thus, allows interpretation of the Act to require, or authorize the SEC to require, an investment adviser to disclose the identity, investments, or affairs of any client.)
(Sec. 6) Directs the SEC to exempt from the registration requirements of this Act: (1) venture capital fund advisers; and (2) investment advisers of private funds, each of which has assets under management in the United States of less than $150 million. Directs the SEC to require such advisers, however, to maintain records and make annual reports to the SEC.
(Sec. 7) Requires the SEC, in prescribing regulations for registration of advisers to mid-sized private funds, to: (1) take into account the size, governance, and investment strategy of such funds to determine whether they pose systemic risk; and (2) provide for registration and examination procedures for such advisers which reflect the level of systemic risk posed by the funds.
(Sec. 8) Modifies SEC rulemaking authority. Authorizes the SEC to ascribe different meanings to terms, but prohibits including in the term "client" an investor in a private fund managed by an investment adviser with whom the private fund has entered into an advisory contract.
Directs the SEC and the Commodity Futures Trading Commission (CFTC) to promulgate rules jointly for the mandatory reports filed by certain registered investment advisers.
(Sec. 9) Directs the Comptroller General to assess the annual costs on industry members and their investors because of the registration requirements and ongoing reporting requirements of this Act.
(Sec. 11) Amends the Investment Advisers Act of 1940 with respect to SEC authority to exempt any person or transaction (or any class or classes of them) from certain investment advisory contract requirements to the extent that the exemption relates to an investment advisory contract with any person that the Commission determines does not need the protections of such requirements. Requires the SEC, with respect to any factor involving a dollar amount test (e.g. a net asset threshold) it uses to make such a determination, to adjust that test for inflation every five years.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3818 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 3818
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 15, 2009
Mr. Kanjorski introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
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.
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 ``Private Fund Investment Advisers
Registration Act of 2009''.
SEC. 2. DEFINITIONS.
Section 202(a) of the Investment Advisers Act of 1934 (15 U.S.C.
80b-2(a)) is amended by adding at the end the following new paragraphs:
``(29) Private fund.--The term `private fund' means an
investment fund 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; 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--
``(A) has no place of business in the United
States;
``(B) during the preceding 12 months has had--
``(i) fewer than 15 clients in the United
States; and
``(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
``(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.''.
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--
(1) in paragraph (1), by inserting ``, except an investment
adviser who acts as an investment adviser to any private
fund,'' after ``any investment adviser'';
(2) by amending paragraph (3) to read as follows:
``(3) any investment adviser that is a foreign private fund
adviser;'';
(3) in paragraph (5), by striking ``or'' at the end; and
(4) in paragraph (6)--
(A) in subparagraph (A), by striking ``or'';
(B) in subparagraph (B), by striking the period at
the end and adding ``; or''; and
(C) by adding at the end the following new
subparagraph:
``(C) a private fund.''.
SEC. 4. COLLECTION OF SYSTEMIC RISK DATA.
Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
4) is amended--
(1) by redesignating subsections (b) and (c) as subsections
(c) and (d), respectively; and
(2) by inserting after subsection (a) the following new
subsection:
``(b) Records and Reports of Private Funds.--
``(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.
``(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--
``(A) the amount of assets under management;
``(B) the use of leverage (including off-balance
sheet leverage);
``(C) counterparty credit risk exposures;
``(D) trading and investment positions;
``(E) trading practices; and
``(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.
``(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 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.
``(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.
``(5) Examination of records.--
``(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.
``(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.
``(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.
``(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.
``(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 of section
552 of title 5, United States Code, this paragraph shall be
considered a statute described in subsection (b)(3)(B) of such
section.''.
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).
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:
``(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 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.''.
SEC. 7. CLARIFICATION OF RULEMAKING AUTHORITY.
Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
11) is amended--
(1) by amending subsection (a) to read as follows:
``(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--
``(1) classify persons and matters within its jurisdiction
based upon, but not limited to--
``(A) size;
``(B) scope;
``(C) business model;
``(D) compensation scheme; or
``(E) potential to create or increase systemic
risk;
``(2) prescribe different requirements for different
classes of persons or matters; and
``(3) ascribe different meanings to terms (including the
term `client') used in different sections of this title as the
Commission determines necessary to effect the purposes of this
title.''; and
(2) by adding at the end the following new subsection:
``(e) The Commission and the Commodity Futures Trading Commission
shall, after consultation with the Board of Governors of the Federal
Reserve System, within 6 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(i) 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.).''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Committee Consideration and Mark-up Session Held.
Ordered to be Reported (Amended) by the Yeas and Nays: 67 - 1.
Reported (Amended) by the Committee on 111-686, Part I.
Referred sequentially to the House Committee on Agriculture for a period ending not later than Dec. 17, 2010 for consideration of such provisions of the bill and amendment as fall within the jurisdiction of that committee pursuant to clause 1(a) of rule X.
Reported (Amended) by the Committee on 111-686, Part I.
Committee on Agriculture discharged.
Committee on Agriculture discharged.
Placed on the Union Calendar, Calendar No. 407.
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