Client Alert

Treasury Proposes Legislation for Regulation of Private Funds

July 27, 2009

The Investment Management and Private Funds Practices

On July 15, 2009, the Obama administration delivered proposed legislation to Congress that seeks to regulate hedge funds and other private pools of capital, such as private equity funds, venture capital funds, and certain real estate funds. The Private Fund Investment Advisers Registration Act of 2009 (the Bill) would amend the Investment Advisers Act of 1940 (the Advisers Act) in a number of ways and, if enacted in its current form, would require all U.S.-based investment advisers with more than $30 million in assets under management to register with the Securities and Exchange Commission (the SEC). In addition, on July 10, 2009, the Obama Administration proposed the Investor Protection Act of 2009 (the IPA), which would significantly increase the SECs authority to regulate registered investment advisers.


The Bill appears to be based on the Private Fund Transparency Act of 2009, which was introduced by Senator Jack Reed, Democrat of Rhode Island, on June 16, 2009 (the PFTA). The PFTA was the third bill introduced this year designed to regulate private funds, including hedge funds, private equity funds, and venture capital funds. This proposed legislation, in combination with the Hedge Fund Adviser Registration Act of 2009 and the Hedge Fund Transparency Act, evidences the increasing momentum for requiring advisers of private funds to register with the SEC.

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