WASHINGTON Dec 4 The U.S. House of
Representatives passed a bill on Wednesday that would largely
spare private equity fund advisers from federal regulations
enacted after the 2007-2009 financial crisis.
The bill would exempt many private equity fund advisers from
a provision in the 2010 Dodd-Frank Wall Street Reform law which
required advisers with more than $150 million in assets under
management to register with the U.S. Securities and Exchange
Any firm that registers with the SEC is also subject to
reporting rules and is required to open its books to agency
examiners for routine compliance inspections.
Dodd-Frank also imposed more extensive confidential
reporting requirements on larger private equity and hedge fund
advisers in an effort to help U.S. regulators monitor possible
broader systemic market risks.
In a 254-159 vote Wednesday, the Republican-controlled House
passed the bill with more than 30 Democrats also voting in
favor. It does not stand a strong chance of becoming law,
however, because there is no likely action in the
Democratic-controlled U.S. Senate after President Barack Obama
threatened to veto the bill.
The administration said it "represents a step backwards from
the progress made to date, given that private equity fund
advisers have been filing reports with the SEC for over a year."
Republicans who voted to support the bill on Wednesday
argued that the SEC's new rules of the road for private equity
funds are unwarranted and overly burdensome.
They said that because only sophisticated investors can buy
into private equity deals, the SEC should focus on examining and
regulating advisers that deal with small investors.
"The Dodd-Frank Act has imposed enormous burdens on private
equity firms, forcing most fund advisers to spend millions of
dollars complying with new SEC registration and reporting
requirements," said New Jersey Republican Scott Garrett, who
chairs a Financial Services Committee panel with oversight of
SEC Chair Mary Jo White also previously recommended against
passing the bill, saying the markets would "not be well-served
by narrowing the scope of the commission's jurisdiction" in the
private equity area.