On October 27, the House Financial Services Committee passed H.R. 3818, the Private Fund Investment Advisers Registration Act, introduced by Congressman Paul E. Kanjorski (D-Pennsylvania), chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises. The Committee passed H.R. 3818 with extensive bipartisan support by a vote of 67-1.
H.R. 3818 mandates that private advisors to private pools of capital register with the SEC. The Act also imposes new recordkeeping and disclosure requirements on private advisors. “The advisers to hedge funds, private equity firms, single-family offices, and other private pools of capital will have to obey some basic ground rules in order to continue to play in our capital markets,” Kanjorski said.
The Committee passed by a 49 to 14 voice vote the next day, October 28, the Accountability and Transparency in Rating Agencies Act, and is expected to also vote on Kanjorski’s H.R. 3817, the Investor Protection Act and H.R. 3890.
Markup of H.R. 2609, legislation to create a Federal Insurance Office Act of 2009, was to take place on October 28 as well, but was postponed so that the House Financial Services Committee could consult with the House Ways and Means trade subcommittee about international preemption provisions.
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During markup of the Investor Protection Act on October 28, several amendments were approved by voice vote, including an amendment proposed by Rep. Dan Maffei (D-New York) to clarify “how insurance will be treated as to a fiduciary duty.” The amendment clarifies that broker/dealers and their representatives offering a limited basket of products will not violate the fiduciary standard for that reason. “My language clarifies that [B/Ds and their reps] would not have to be knowledgeable of all products in the universe,” Maffei said.
Another amendment was approved that would require the SEC to create a registration requirement for municipal securities advisors and that these advisors also be held to a fiduciary standard of care to municipal issuers they deal with.