On October 1, 2009, in an effort to ensure that “everyone who swims in our capital markets has an annual pool pass,” Representative Paul E. Kanjorski (D-PA) released a “discussion draft” of a bill that would amend the Investment Advisers Act of 1940 (IAA) by requiring advisers to certain unregistered investment companies, including hedge funds, to register with and provide information to the Securities and Exchange Commission (SEC). The proposed “Private Fund Investment Advisers Registration Act of 2009” (Draft) was released just prior to a House Financial Services Subcommittee on Capital Markets hearing held on October 6, 2009. The bill generally would require U.S. hedge fund advisers with assets under management collectively across their funds of over $30 million to register with the SEC, even if the adviser has fewer than 15 “clients.” Kanjorski’s draft essentially mirrors the U.S. Treasury Department’s bill by the same name which was released in July 2009 (Treasury Bill). See “U.S. Treasury Department Proposes Legislation Requiring Registration of Hedge Fund Advisers
,” Hedge Fund Law Report, Vol. 2, No. 29 (Jul. 23, 2009). This article analyzes the Draft and the Treasury bill, detailing the mechanics of each and noting how they are similar and different on points such as the collection of systemic risk data, information required to be reported, a registration exemption for venture capital fund advisers and expansion of the SEC’s authority to obtain information on the identity, investments or affairs of any client of a hedge fund adviser. This article also details industry reactions to the Draft as embodied in testimony by representative of the Managed Funds Association, the Private Equity Council, the Coalition of Private Investment Companies and the National Venture Capital Association at the October 6 hearing before the House Financial Services Subcommittee on Capital Markets.