This bill would change certain record-keeping and reporting burdens that currently apply to investment advisers at private equity firms and private investment funds. It would also modify some rules and regulations used by the Securities and Exchange Commission (SEC) to govern how
For advisers whose businesses are structured in a format other than a partnership, requirements related to the assignment of advisory contracts when there’s a change in the firm’s minority ownership would be eased. This would be done to eliminate a bias against corporate structures other than partnerships, as partnerships are exempted from these requirements under current law.
A rule that prevents advisers from using testimonials or references to specific recommendations they’d made in the past would be lifted, but only for materials distributed to high net worth individuals that are considered accredited investors. In lieu of the ban, these materials would be subject to existing anti-fraud standards.
An exception to the SEC’s Custody Rule would be broadened for privately offered securities by eliminating the requirement that privately offered securities in an unaudited pool have to be held by someone who is qualified. Under current law, only securities from an audited pool are exempt.
The Custody Rule’s required annual surprise exams would be lifted for private funds that:
Are owned exclusively by the adviser or the people it serves, its affiliates or their principals, or service providers to the fund, its clients, or portfolio companies;
Are set up to only hold securities from one company and the fund has a controlling interest in that company.