[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3818 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3818

  To amend the Investment Advisers Act of 1940 to require advisers of 
certain unregistered investment companies to register with and provide 
 information to the Securities and Exchange Commission, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 15, 2009

Mr. Kanjorski introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Investment Advisers Act of 1940 to require advisers of 
certain unregistered investment companies to register with and provide 
 information to the Securities and Exchange Commission, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Private Fund Investment Advisers 
Registration Act of 2009''.

SEC. 2. DEFINITIONS.

    Section 202(a) of the Investment Advisers Act of 1934 (15 U.S.C. 
80b-2(a)) is amended by adding at the end the following new paragraphs:
            ``(29) Private fund.--The term `private fund' means an 
        investment fund that--
                    ``(A) would be an investment company under section 
                3(a) of the Investment Company Act of 1940 (15 U.S.C. 
                80a-3(a)) but for the exception provided from that 
                definition by either section 3(c)(1) or section 3(c)(7) 
                of such Act; and
                    ``(B) either--
                            ``(i) is organized or otherwise created 
                        under the laws of the United States or of a 
                        State; or
                            ``(ii) has 10 percent or more of its 
                        outstanding securities by value owned by United 
                        States persons.
            ``(30) Foreign private fund adviser.--The term `foreign 
        private fund adviser' means an investment adviser who--
                    ``(A) has no place of business in the United 
                States;
                    ``(B) during the preceding 12 months has had--
                            ``(i) fewer than 15 clients in the United 
                        States; and
                            ``(ii) assets under management attributable 
                        to clients in the United States of less than 
                        $25,000,000, or such higher amount as the 
                        Commission may, by rule, deem appropriate in 
                        the public interest or for the protection of 
                        investors; and
                    ``(C) neither holds itself out generally to the 
                public in the United States as an investment adviser, 
                nor acts as an investment adviser to any investment 
                company registered under the Investment Company Act of 
                1940, or a company which has elected to be a business 
                development company pursuant to section 54 of the 
                Investment Company Act of 1940 (15 U.S.C. 80a-53) and 
                has not withdrawn such election.''.

SEC. 3. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED EXEMPTION FOR 
              FOREIGN PRIVATE FUND ADVISERS; LIMITED INTRASTATE 
              EXEMPTION.

    Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-3(b)) is amended--
            (1) in paragraph (1), by inserting ``, except an investment 
        adviser who acts as an investment adviser to any private 
        fund,'' after ``any investment adviser'';
            (2) by amending paragraph (3) to read as follows:
            ``(3) any investment adviser that is a foreign private fund 
        adviser;'';
            (3) in paragraph (5), by striking ``or'' at the end; and
            (4) in paragraph (6)--
                    (A) in subparagraph (A), by striking ``or'';
                    (B) in subparagraph (B), by striking the period at 
                the end and adding ``; or''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(C) a private fund.''.

SEC. 4. COLLECTION OF SYSTEMIC RISK DATA.

    Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
4) is amended--
            (1) by redesignating subsections (b) and (c) as subsections 
        (c) and (d), respectively; and
            (2) by inserting after subsection (a) the following new 
        subsection:
    ``(b) Records and Reports of Private Funds.--
            ``(1) In general.--The Commission is authorized to require 
        any investment adviser registered under this Act to maintain 
        such records of and file with the Commission such reports 
        regarding private funds advised by the investment adviser as 
        are necessary or appropriate in the public interest and for the 
        protection of investors or for the assessment of systemic risk 
        as the Commission determines in consultation with the Board of 
        Governors of the Federal Reserve System. The Commission is 
        authorized to provide or make available to the Board of 
        Governors of the Federal Reserve System, and to any other 
        entity that the Commission identifies as having systemic risk 
        responsibility, those reports or records or the information 
        contained therein. The records and reports of any private fund, 
        to which any such investment adviser provides investment 
        advice, maintained or filed by an investment adviser registered 
        under this Act, shall be deemed to be the records and reports 
        of the investment adviser.
            ``(2) Required information.--The records and reports 
        required to be maintained or filed with the Commission under 
        this subsection shall include, for each private fund advised by 
        the investment adviser--
                    ``(A) the amount of assets under management;
                    ``(B) the use of leverage (including off-balance 
                sheet leverage);
                    ``(C) counterparty credit risk exposures;
                    ``(D) trading and investment positions;
                    ``(E) trading practices; and
                    ``(F) such other information as the Commission, in 
                consultation with the Board of Governors of the Federal 
                Reserve System, determines necessary or appropriate in 
                the public interest and for the protection of investors 
                or for the assessment of systemic risk.
            ``(3) Optional information.--The Commission may require the 
        reporting of such additional information from private fund 
        advisers as the Commission determines necessary. In making such 
        determination, the Commission may set different reporting 
        requirements for different classes of private fund advisers, 
        based on the particular types or sizes of private funds advised 
        by such advisers.
            ``(4) Maintenance of records.--An investment adviser 
        registered under this Act is required to maintain and keep such 
        records of private funds advised by the investment adviser for 
        such period or periods as the Commission, by rule or 
        regulation, may prescribe as necessary or appropriate in the 
        public interest and for the protection of investors or for the 
        assessment of systemic risk.
            ``(5) Examination of records.--
                    ``(A) Periodic and special examinations.--All 
                records of a private fund maintained by an investment 
                adviser registered under this Act shall be subject at 
                any time and from time to time to such periodic, 
                special, and other examinations by the Commission, or 
                any member or representative thereof, as the Commission 
                may prescribe.
                    ``(B) Availability of records.--An investment 
                adviser registered under this Act shall make available 
                to the Commission or its representatives any copies or 
                extracts from such records as may be prepared without 
                undue effort, expense, or delay as the Commission or 
                its representatives may reasonably request.
            ``(6) Information sharing.--The Commission shall make 
        available to the Board of Governors of the Federal Reserve 
        System, and to any other entity that the Commission identifies 
        as having systemic risk responsibility, copies of all reports, 
        documents, records, and information filed with or provided to 
        the Commission by an investment adviser under this subsection 
        as the Board, or such other entity, may consider necessary for 
        the purpose of assessing the systemic risk of a private fund. 
        All such reports, documents, records, and information obtained 
        by the Board, or such other entity, from the Commission under 
        this subsection shall be kept confidential.
            ``(7) Disclosures of certain private fund information.--An 
        investment adviser registered under this Act shall provide such 
        reports, records, and other documents to investors, prospective 
        investors, counterparties, and creditors, of any private fund 
        advised by the investment adviser as the Commission, by rule or 
        regulation, may prescribe as necessary or appropriate in the 
        public interest and for the protection of investors or for the 
        assessment of systemic risk.
            ``(8) Confidentiality of reports.--Notwithstanding any 
        other provision of law, the Commission shall not be compelled 
        to disclose any report or information contained therein 
        required to be filed with the Commission under this subsection. 
        Nothing in this paragraph shall authorize the Commission to 
        withhold information from the Congress or prevent the 
        Commission from complying with a request for information from 
        any other Federal department or agency or any self-regulatory 
        organization requesting the report or information for purposes 
        within the scope of its jurisdiction, or complying with an 
        order of a court of the United States in an action brought by 
        the United States or the Commission. For purposes of section 
        552 of title 5, United States Code, this paragraph shall be 
        considered a statute described in subsection (b)(3)(B) of such 
        section.''.

SEC. 5. ELIMINATION OF DISCLOSURE PROVISION.

    Section 210 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
10) is amended by striking subsection (c).

SEC. 6. EXEMPTION OF AND REPORTING BY VENTURE CAPITAL FUND ADVISERS.

    Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) is amended by adding at the end the following new subsection:
    ``(l) Exemption of and Reporting by Venture Capital Fund 
Advisers.--The Commission shall identify and define the term `venture 
capital fund' and shall provide an adviser to such a fund an exemption 
from the registration requirements under this section. The Commission 
shall require such advisers to maintain such records and provide to the 
Commission such annual or other reports as the Commission determines 
necessary or appropriate in the public interest or for the protection 
of investors.''.

SEC. 7. CLARIFICATION OF RULEMAKING AUTHORITY.

    Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
11) is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) The Commission shall have authority from time to time to 
make, issue, amend, and rescind such rules and regulations and such 
orders as are necessary or appropriate to the exercise of the functions 
and powers conferred upon the Commission elsewhere in this title, 
including rules and regulations defining technical, trade, and other 
terms used in this title. For the purposes of its rules and 
regulations, the Commission may--
            ``(1) classify persons and matters within its jurisdiction 
        based upon, but not limited to--
                    ``(A) size;
                    ``(B) scope;
                    ``(C) business model;
                    ``(D) compensation scheme; or
                    ``(E) potential to create or increase systemic 
                risk;
            ``(2) prescribe different requirements for different 
        classes of persons or matters; and
            ``(3) ascribe different meanings to terms (including the 
        term `client') used in different sections of this title as the 
        Commission determines necessary to effect the purposes of this 
        title.''; and
            (2) by adding at the end the following new subsection:
    ``(e) The Commission and the Commodity Futures Trading Commission 
shall, after consultation with the Board of Governors of the Federal 
Reserve System, within 6 months after the date of enactment of the 
Private Fund Investment Advisers Registration Act of 2009, jointly 
promulgate rules to establish the form and content of the reports 
required to be filed with the Commission under sections 203(i) and 
204(b) and with the Commodity Futures Trading Commission by investment 
advisers that are registered both under the Investment Advisers Act of 
1940 (15 U.S.C. 80b-1 et seq.) and the Commodity Exchange Act (7 U.S.C. 
1 et seq.).''.
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