{"bills":[{"photos":{"featured":"https://assets.causes.com/bill/photo/hr5424-114/featured_investment-advisers-modernization-act-of-2016-1473376990.jpg","featured_large":"https://assets.causes.com/bill/photo/hr5424-114/featured_large_investment-advisers-modernization-act-of-2016-1473376990.jpg","shareable":"https://n.causes.com/share-images/bills/hr5424-114.png"},"introduced_on":"2016-06-09","title_override":"Do Investment Advisers Need a Break From Certain Record-keeping Requirements?","summary_override":"

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.

","official_title":"To amend the Investment Advisers Act of 1940 and to direct the Securities and Exchange Commission to amend its rules to modernize certain requirements relating to investment advisers, and for other purposes.","short_title":"Investment Advisers Modernization Act of 2016","popular_title":null,"short_summary":"Investment Advisers Modernization Act of 2016\n\nThis bill directs the Securities and Exchange Commission (SEC) to amend specified regulations for investment advisers as they apply to private equity firms and private investment funds.\n\n(Sec. 2) The bill revises the disclaimer that, in the case of an investment adviser that is a partnership, an assignment shall not be deemed to result from the death, withdrawal, sale or transfer of minority interests to apply the disclaimer also to minority members, shareholders, for other equity owners of the investment adviser. Qualified clients of an investment adviser may consent to an assignment of the investment adviser contract at the time they enter into an advisory contract.\n\nThe Investment Advisers Act of 1940 is amended to repeal the requirement that advisers organized as partnerships notify the other party to an investment adviser contract every time there is a change in the composition of the partnership.\n\nThe SEC shall waive the application o...","summarized":true,"cost":0,"cost_commentary":"The CBO estimates that implementing this bill would cost $2 million over the 2017-2021 period, although the SEC would collect fees to offset this amount, meaning that its net effect on spending would be minimal.","impact":"Investment advisers at private equity firms and private investment funds; their investors; and the SEC.","argument_for":"A lot the requirements that are being changed by this bill don’t make sense given how the advisers’ firms are structured, and there’s bipartisan support for these regulatory changes.","argument_against":"Congress shouldn’t allow investment advisers to get relief from record-keeping and reporting requirements, as they were put in place to ensure investors’ assets are protected.","bill_type":"hr","published":true,"type":"FederalBill","id":"hr5424-114","bill_id":"hr5424-114","formal_id":"H.R. 5424","chamber":"house","congress":114,"last_action_at":"2016-09-12T00:00:00.000Z","active":true,"enacted":false,"enacted_at":null,"vetoed":false,"last_vote_at":"2016-09-09T16:10:48.000Z","debated_on":"2016-09-05T00:00:00.000Z","congress_url":"https://www.congress.gov/bill/114th/house-bill/5424","plain_text_url":"https://www.gpo.gov/fdsys/pkg/BILLS-114hr5424rfs/html/BILLS-114hr5424rfs.htm","shareable_image_url":"https://n.causes.com/share-images/bills/hr5424-114.png","congress_full_text_url":"https://www.congress.gov/bill/114th/house-bill/5424/text","is_current_congress":false,"last_version_on":"2016-06-09","related_bill_ids":["hres844-114"],"progress":"Passed House","house_passage_result":true,"senate_passage_result":false,"position_count":149,"committees":[{"name":"Committee on Financial Services","chamber":"house","committee_id":"HSBA","subcommittee":false},{"name":"Committee on Banking, Housing, and Urban Affairs","chamber":"senate","committee_id":"SSBK","subcommittee":false},{"name":"Investor Protection, Entrepreneurship, and Capital Markets","chamber":"house","committee_id":"HSBA16","subcommittee":true}],"links":{"rollCalls":"/api/roll_calls?bill_id=hr5424-114","details":"/api/bills/hr5424-114/details","sharingMessage":"/api/sharing_messages/hr5424-114","positionsFor":"/api/bills/hr5424-114/positions/for","positionsAgainst":"/api/bills/hr5424-114/positions/against"},"upcoming":false,"cosponsors_count":5,"slug":"hr5424-114-investment-advisers-modernization-act-of-2016","latest_chamber_votes_id":"hr5424-114","official_url":null,"target_video":true,"following":false,"vote_count":1765,"yea_vote_count":255,"nay_vote_count":1501,"passed_house":true,"passed_senate":false,"vote_id":null,"my_position_id":null,"topic_ids":["economy"],"issue_ids":["economy","private-sector"],"sponsor_id":377}],"votes":[],"issues":[{"id":"economy","name":"Economy","slug":"economy","description":"The US Economy is heavily impacted by Federal legislation. 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Do Investment Advisers Need a Break From Certain Record-keeping Requirements?