Investment Advisers Modernization Act

Contact: Daniel D. Hill

Last Friday the U.S. House of Representatives approved HR 5424.

H.R. 5424 provides various reforms to the Investment Advisers Act of 1940 to modernize certain disclosure requirements for investors and their advisors and lessen the regulatory burden on private equity and other investment advisers. Specifically, the bill:

  • Allows advisers organized as partnerships to change the composition of the partnership without providing notice to the Securities and Exchange Commission (SEC) every time there is a change in the partnership;
  • Lifts certain securities advertising restrictions on advisors who advertise to qualified investors, exempts private equity fund sponsors from certain enhanced disclosures to the SEC (Form ADV, Part 2);
  • Removes certain reporting requirements for large private equity funds to treat them like other equity funds (Form PF, Part 4);
  • Provides an exemption from the Proxy Advisor Voting rule for investment advisers who exercise voting authority only with respect to non-public securities;
  • Expands the “privately offered securities” exemption under the Custody Rule so that it applies to both certificated and uncertificated securities and providing an exemption for special purpose vehicles (SPV) managed by private fund sponsors and co-investment funds that hold only one investment; and
  • Prevents the misapplication of SEC Rule 156 in the private funds space, thereby enabling both regulators and investors alike to understand that private funds and mutual funds are significantly different types of investment vehicles.

On to the Senate next.

 When you need a securities services law firm in Utah

Our securities law attorneys are ready to help.  For more information about the services SCM provides in this area, contact Daniel D. Hill.