House Passes Legislation Requiring Private Fund Adviser Registration and Fiduciary Standard for Brokers
The U.S. House of Representatives approved financial services legislation that would require all private fund managers of funds with more than $150 Million in assets to register as investment advisers. The legislation would exempt “venture capital companies,” as ultimately defined by the SEC. The new laws would require significant information reporting about private funds including shareholder information. The legislation would also create a derivatives exchange, expand SEC authority and enforcement powers, regulate asset-backed securities, and impose a fiduciary standard on brokers giving personalized financial advice. According to the Press Release issued by the House Committee on Financial Services, “Once signed into law, these tough new regulations will hold Wall Street accountable…”
OUR TAKE: Much debate still remains as the Senate must also consider the legislation. We still predict ultimate passage of the components relevant to the investment management industry including private fund adviser registration and a fiduciary standard for brokers.