The House of Representatives passed Wednesday by a 254 to 159 vote H.R. 1105, the Small Business Capital Access and Job Preservation Act, which would exempt private equity fund advisors from registration and reporting requirements with the Securities and Exchange Commission.
H.R. 1105 would exempt private equity fund advisors from registration provided that the funds have not been borrowed and don’t have an outstanding principal amount that is more than twice their invested capital commitments.
The Obama administration told the bill’s sponsor, Rep. Robert Hurt, R-Va., and its 12 co-sponsors Tuesday that it would veto the bill, arguing it “effectively provides a blanket registration and reporting exemption for private equity funds, undermining advances in investor protection and regulatory oversight implemented” by the SEC under Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
A Senate Banking Committee spokesman told ThinkAdvisor that he was not aware of a Senate companion bill to H.R. 1105.
The administration said the bill’s passage was a “step backwards” from the disclosure requirements that Congress laid out in Dodd-Frank to allow regulators to assess potential systemic risks. H.R. 1105 “would deny investors access to important information intended to increase transparency and accountability and to minimize conflicts of interest,” the administration told Hurt.
Private equity funds are already subject to less stringent reporting requirements than other types of private funds and to an annual, rather than quarterly, filing requirement, the administration argued.
In addition, private fund advisors with less than $150 million in assets under management are exempted from registration and subject only to recordkeeping and reporting requirements.
However, Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said after the House vote that “many of us would argue on a bipartisan basis that part of the act that requires small-business investors who are private equity advisors to register with the SEC is perhaps one of those provisions that is in need of reform.”