Investment Advisers Modernization Act of 2016

Here is the link to the proposed “Investment Advisers Modernization Act of 2016”

Here is the pertinent language from the proposed bill that would substantially limit private fund advisers’ reporting obligations:

(b) FORM PF.—Not later than 90 days after the date of the enactment of this Act, the Commission shall amend section 275.204(b)–1 of title 17, Code of Federal Regulations, to provide that an investment adviser to a private fund is not required to report any information beyond that which is required by sections 1a and 1b of Form PF, unless such investment adviser is a large hedge fund adviser or a large liquidity fund adviser (as such terms are defined in such Form).

Here is the link to Jennifer Taub’s written testimony from Tuesday, May 17, 2016:

http://financialservices.house.gov/uploadedfiles/hhrg-114-ba16-wstate-jtaub-20160517.pdf

WRITTEN TESTIMONY OF JENNIFER TAUB PROFESSOR OF LAW VERMONT LAW SCHOOL

BEFORE THE
UNITED STATES HOUSE OF REPRESENTATIVES COMMITTEE ON FINANCIAL SERVICES

SUBCOMMITTEE ON CAPITAL MARKETS AND GOVERNMENT SPONSORED ENTERPRISES

“LEGISLATIVE PROPOSALS TO ENHANCE CAPITAL FORMATION, TRANSPARENCY,
AND REGULATORY ACCOUNTABILITY”

MAY 17, 2016 2:00 P.M

Here the page 7 excerpt of Jennifer’s testimony with references to data analyses:

The benefits of these two Dodd-Frank changes to bring private fund advisers out of the shadows have been considerable and costs minimal. Filing form PF is not expensive. University of St. Thomas School of Law Professor Wulf Kaal gathered data through a survey of private funds. He found that the majority of respondents spent just $10,000 in their first year of filing and half that the following year.9 Altogether, compliance costs associated with Dodd-Frank filing and reporting requirements for private funds ranged from $50,000 to $200,000 per year (with 48% of firms spending between $50,000 – $100,000).10 This is minimal relative to management fees and to the investor protection and systemic risk benefits. These costs do not appear to have negatively impacted fund returns. After studying the returns of more than 3,400 private funds, Professor Kaal and colleagues determined that private fund registration and disclosure required under Dodd-Frank had no impact on fund returns.11

Here is the YouTube video with Jennifer’s testimony:

 

 

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