October 1, 2009 / 9:46 PM / 10 years ago

U.S. lawmaker drafts hedge fund, insurance bills

WASHINGTON, Oct 1 (Reuters) - Hedge fund advisers would have to register with U.S. authorities under draft legislation released on Thursday by a senior lawmaker.

It mirrors an Obama administration proposal, but exempts venture capital funds.

“We need to ensure that everyone who swims in our capital markets has an annual pool pass,” said Representative Paul Kanjorski, the Democratic chairman of the House of Representatives capital markets subcommittee, in a statement.

He said his bill would mandate registration with the U.S. Securities and Exchange Commission (SEC) of hedge funds and other private pools of capital. Some hedge funds already do this voluntarily, but some do not.

“Many financial firms skirt government oversight and get away like bandits, but now the advisers to hedge funds, private equity firms, and other private pools of capital would become subject to more scrutiny by the SEC,” Kanjorski said.

President Barack Obama sent a draft bill to Congress earlier this year calling for hedge fund registration.

Kanjorski’s bill is nearly identical, except that it adds a section specifically exempting venture capital fund advisers from full compliance, while requiring them to keep some records and leaving further decisions about them up to the SEC.

Separately, Kanjorski also released draft legislation calling for the establishment of an Office of National Insurance within the Treasury Department. It also mirrors an Obama administration bill proposed earlier this year, except that it would not give the new office subpoena power.

The new office could monitor, but not regulate, life and property-casualty insurers, but not health insurers. The insurance industry is now regulated by state-level authorities. Some insurers support the present system; some do not.

Under the bill, state insurance laws could be preempted by federal law only when it is found that a non-U.S. insurer is being treated less favorably than a U.S. insurer or in a way that is inconsistent with international agreements. (Reporting by Kevin Drawbaugh; Editing by Diane Craft)

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