[House Report 119-254]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-254
======================================================================
SMALL BUSINESS INVESTOR CAPITAL ACCESS ACT
_______
September 8, 2025.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 3673]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3673) to amend the Investment Advisers Act of
1940 to increase the exemption from registration threshold for
certain investment advisers of private funds to reflect the
change in inflation, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Committee Consideration.......................................... 2
Related Hearings................................................. 3
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 6
Committee Cost Estimate.......................................... 6
New Budget Authority and CBO Cost Estimate....................... 6
Unfunded Mandates Statement...................................... 6
Earmark Statement................................................ 6
Federal Advisory Committee Act Statement......................... 7
Applicability to the Legislative Branch.......................... 7
Duplication of Federal Programs.................................. 7
Section-by-Section Analysis of the Legislation................... 7
Changes in Existing Law Made by the Bill, as Reported............ 7
Documents included by Unanimous Consent.......................... 20
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Investor Capital Access
Act''.
SEC. 2. INFLATION ADJUSTMENT FOR THE EXEMPTION THRESHOLD FOR CERTAIN
INVESTMENT ADVISERS OF PRIVATE FUNDS.
Section 203(m) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3(m)) is amended--
(1) in paragraph (1), by striking ``$150,000,000'' and
inserting ``$175,000,000''; and
(2) by adding at the end the following:
``(5) Inflation adjustment.--The Commission shall, every 5
years, adjust the dollar amount described under paragraph (1)
to reflect the change in the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the
Department of Labor, and round such dollar amount to the
nearest multiple of $1,000,000.''.
Purpose and Summary
H.R. 3673, the Small Business Investor Capital Access Act,
was introduced on June 3, 2025, by Republican Representative
Andy Barr (KY-06). H.R. 3673 amends the Investment Advisers Act
of 1940 to increase the exemption from registration threshold
for advisers to small private funds to reflect changes in
inflation.
Background and Need for Legislation
The Dodd-Frank Act imposed mandates for private funds to
register with the Securities and Exchange Commission (SEC) and
comply with new reporting requirements, while exempting private
fund advisers with less than $150 million in assets under
management from registration. Private fund advisers are
individuals who manage funds that are not publicly offered for
a limited number of qualified purchasers. Since these are
smaller funds with a limited number of investors, they are
subject to exemptions from SEC registration requirements.
The $150 million threshold exempted smaller advisers to
private funds from potentially burdensome regulatory
requirements. However, the $150 million AUM threshold has not
changed since 2010, nor did Dodd-Frank include any type of
inflation adjuster to that threshold. H.R. 3673 adjusts the
exemption from registration threshold for advisers to small
private funds to accurately reflect changes in inflation in the
past 15 years. Overly burdensome compliance requirements can
stifle the growth of smaller, innovative private funds. These
funds often play a crucial role in providing capital to
emerging companies and niche markets that larger, more heavily
regulated funds might overlook.
Committee Consideration
119TH CONGRESS
On June 3, 2025, Representative Barr introduced H.R. 3673,
the Small Business Investor Capital Access Act, with
Representative Nydia Velazquez (D-NY) as an original cosponsor.
The bill was referred solely to the Committee on Financial
Services. The bill was attached to the February 26, 2025,
hearing titled ``The Future of American Capital: Strengthening
Public and Private Markets by Increasing Investor Access and
Facilitating Capital Formation'' and the March 25, 2025,
hearing titled, ``Beyond Silicon Valley: Expanding Access to
Capital Across America.''
On July 22, 2025, the Committee on Financial Services met
in open session to consider, among others, H.R. 3673. The
Committee ordered H.R. 3673, as amended, to be favorably
reported to the House of Representatives.
118TH CONGRESS
On April 13, 2023, Representative Barr introduced H.R.
2578, the Small Business Investor Capital Access Act. This bill
is an earlier iteration of H.R. 3673. The bill was referred
solely to the Committee on Financial Services. The bill was
included in H.R. 2799, the Expanding Access to Capital Act of
2023, which passed the House on March 8, 2024, by a recorded
vote of 212 yeas and 205 nays. It was received in the Senate
and referred to the Committee on Banking, Housing, and Urban
Affairs.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearings were used to
develop H.R. 3673:
The Capital Markets Subcommittee of the Committee on
Financial Services held a February 26, 2025, hearing titled
``The Future of American Capital: Strengthening Public and
Private Markets by Increasing Investor Access and Facilitating
Capital Formation'' and the Full Committee held a March 25,
2025, hearing titled, ``Beyond Silicon Valley: Expanding Access
to Capital Across America.'' A discussion draft version of the
bill was attached to both hearings. The following witnesses
testified at the February 26, 2025, hearing: Mr. Andrew
Barnell, CEO and Co-Founder, Geneoscopy; Mr. McKeever Conwell,
Founder and Managing Partner, RareBreed Ventures; Ms. Rebecca
Kacaba, CEO and Co-Founder, DealMaker; Ms. Anna Pinedo,
Partner, Mayer Brown; and Ms. Alexandra Thornton, Senior
Director, Financial Regulation, Center for American Progress.
The following witnesses testified at the March 25, 2025,
hearing: Mr. Steve Case, Chairman and CEO, Revolution LLC; Mr.
Bill Newell, Senior Business Advisor & Former CEO, Sutro
Biopharma; Ms. Candice Matthews Brackeen, General Partner,
Lightship Capital; Mr. Joel Trotter, Partner, Latham & Watkins
LLP; and Ms. Amanda Senn, Director of the Alabama Securities
Commission.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include record
votes on the motion to report legislation and amendments
thereto.
On July 22, 2025, the Committee ordered H.R. 3673, as
amended, to be reported favorably to the House by a recorded
vote of 51 yeas and 2 nays. (Record Vote No. FC-173).
The Committee considered the following amendments to H.R.
3673:
Representative Barr offered an amendment in
the nature of a substitute, designated as Barr_060,
which requires the SEC to adjust the private fund
adviser exemption every five years for inflation. This
amendment was adopted by a voice vote.
Representative Velazquez offered an
amendment (No. 1), designated as HR3673_001. This
amendment would increase the private fund adviser
exemption threshold to $175 million. This amendment was
adopted by a voice vote.
Committee Oversight Findings
Pursuant to clause 3(c) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 3673 is to adjust
the exemption from registration threshold for advisers to small
private funds to accurately reflect changes in inflation.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 3673. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee will adopt as
its own the cost estimate for the bill prepared by the Director
of the Congressional Budget Office. However, a cost estimate
was not made available to the Committee in time for the filing
of this report. The Chairman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
Unfunded Mandates Statement
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Chairman of the Committee shall cause
such estimate to be printed in the Congressional Record upon
its receipt by the Committee.
Earmark Statement
In compliance with clause 9 of rule XXI of the Rules of the
House of Representatives, this bill, as reported, contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Federal Advisory Committee Act Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 provides the short title is the ``Small Business
Investor Capital Access Act.''
Section 2. Inflation adjustment for the exemption threshold for certain
investment advisers of private funds
Section 2 requires the SEC to adjust the exemption
threshold for certain private fund advisers every five years.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
INVESTMENT ADVISERS ACT OF 1940
* * * * * * *
TITLE II--INVESTMENT ADVISERS
* * * * * * *
registration of investment advisers
Sec. 203. (a) Except as provided in subsection (b) and
section 203A, it shall be unlawful for any investment adviser,
unless registered under this section, to make use of the mails
or any means or instrumentality of interstate commerce in
connection with his or its business as an investment adviser.
(b) The provisions of subsection (a) shall not apply to--
(1) any investment adviser, other than an investment
adviser who acts as an investment adviser to any
private fund, all of whose clients are residents of the
State within which such investment adviser maintains
his or its principal office and place of business, and
who does not furnish advice or issue analyses or
reports with respect to securities listed or admitted
to unlisted trading privileges on any national
securities exchange;
(2) any investment adviser whose only clients are
insurance companies;
(3) any investment adviser that is a foreign private
adviser;
(4) any investment adviser that is a charitable
organization, as defined in section 3(c)(10)(D) of the
Investment Company Act of 1940, or is a trustee,
director, officer, employee, or volunteer of such a
charitable organization acting within the scope of such
person's employment or duties with such organization,
whose advice, analyses, or reports are provided only to
one or more of the following:
(A) any such charitable organization;
(B) a fund that is excluded from the
definition of an investment company under
section 3(c)(10)(B) of the Investment Company
Act of 1940; or
(C) a trust or other donative instrument
described in section 3(c)(10)(B) of the
Investment Company Act of 1940, or the
trustees, administrators, settlors (or
potential settlors), or beneficiaries of any
such trust or other instrument;
(5) any plan described in section 414(e) of the
Internal Revenue Code of 1986, any person or entity
eligible to establish and maintain such a plan under
the Internal Revenue Code of 1986, or any trustee,
director, officer, or employee of or volunteer for any
such plan or person, if such person or entity, acting
in such capacity, provides investment advice
exclusively to, or with respect to, any plan, person,
or entity or any company, account, or fund that is
excluded from the definition of an investment company
under section 3(c)(14) of the Investment Company Act of
1940;
(6)(A) any investment adviser that is registered with
the Commodity Futures Trading Commission as a commodity
trading advisor whose business does not consist
primarily of acting as an investment adviser, as
defined in section 202(a)(11) of this title, and that
does not act as an investment adviser to--
(i) an investment company registered under
title I of this Act; or
(ii) a company which has elected to be a
business development company pursuant to
section 54 of title I of this Act and has not
withdrawn its election; or
(B) any investment adviser that is registered with
the Commodity Futures Trading Commission as a commodity
trading advisor and advises a private fund, provided
that, if after the date of enactment of the Private
Fund Investment Advisers Registration Act of 2010, the
business of the advisor should become predominately the
provision of securities-related advice, then such
adviser shall register with the Commission;
(7) any investment adviser, other than any entity
that has elected to be regulated or is regulated as a
business development company pursuant to section 54 of
the Investment Company Act of 1940 (15 U.S.C. 80a-54),
who solely advises--
(A) small business investment companies that
are licensees under the Small Business
Investment Act of 1958;
(B) entities that have received from the
Small Business Administration notice to proceed
to qualify for a license as a small business
investment company under the Small Business
Investment Act of 1958, which notice or license
has not been revoked; or
(C) applicants that are affiliated with 1 or
more licensed small business investment
companies described in subparagraph (A) and
that have applied for another license under the
Small Business Investment Act of 1958, which
application remains pending; or
(8) any investment adviser, other than an entity that
has elected to be regulated or is regulated as a
business development company pursuant to section 54 of
the Investment Company Act of 1940 (15 U.S.C. 80a-53),
who solely advises--
(A) rural business investment companies (as
defined in section 384A of the Consolidated
Farm and Rural Development Act (7 U.S.C.
2009cc)); or
(B) companies that have submitted to the
Secretary of Agriculture an application in
accordance with section 384D(b) of the
Consolidated Farm and Rural Development Act (7
U.S.C. 2009cc-3(b)) that--
(i) have received from the Secretary
of Agriculture a letter of conditions,
which has not been revoked; or
(ii) are affiliated with 1 or more
rural business investment companies
described in subparagraph (A).
(c)(1) An investment adviser, or any person who presently
contemplates becoming an investment adviser, may be registered
by filing with the Commission an application for registration
in such form and containing such of the following information
and documents as the Commission, by rule, may prescribe as
necessary or appropriate in the public interest or for the
protection of investors:
(A) the name and form of organization under which the
investment adviser engages or intends to engage in
business; the name of the State or other sovereign
power under which such investment adviser is organized;
the location of his or its principal office, principal
place of business, and branch offices, if any; the
names and addresses of his or its partners, officers,
directors, and persons performing similar functions or,
if such an investment adviser be an individual, of such
individual; and the number of his or its employees;
(B) the education, the business affiliations for the
past ten years, and the present business affiliations
of such investment adviser and of his or its partners,
officers, directors, and persons performing similar
functions and of any controlling person thereof;
(C) the nature of the business of such investment
adviser, including the manner of giving advice and
rendering analyses or reports;
(D) a balance sheet certified by an independent
public accountant and other financial statements (which
shall, as the Commission specifies, be certified);
(E) the nature and scope of the authority of such
investment adviser with respect to clients' funds and
accounts;
(F) the basis or bases upon which such investment
adviser is compensated;
(G) whether such investment adviser, or any person
associated with such investment adviser, is subject to
any disqualification which would be a basis for denial,
suspension, or revocation of registration of such
investment adviser under the provisions of subsection
(e) of this section; and
(H) a statement as to whether the principal business
of such investment adviser consists or is to consist of
acting as investment adviser and a statement as to
whether a substantial part of the business of such
investment adviser, consists or is to consist of
rendering investment supervisory services.
(2) Within forty-five days of the date of the filing of such
application (or within such longer period as to which the
applicant consents) the Commission shall--
(A) by order grant such registration; or
(B) institute proceedings to determine whether
registration should be denied. Such proceedings shall
include notice of the grounds for denial under
consideration and opportunity for hearing and shall be
concluded within one hundred twenty days of the date of
the filing of the application for registration. At the
conclusion of such proceedings the Commission, by
order, shall grant or deny such registration. The
Commission may extend the time for conclusion of such
proceedings for up to ninety days if it finds good
cause for such extension and publishes its reasons for
so finding or for such longer period as to which the
applicant consents.
The Commission shall grant such registration if the Commission
finds that the requirements of this section are satisfied and
that the applicant is not prohibited from registering as an
investment adviser under section 203A. The Commission shall
deny such registration if it does not make such a finding or if
it finds that if the applicant were so registered, its
registration would be subject to suspension or revocation under
subsection (e) of this section.
(d) Any provision of this title (other than subsection (a) of
this section) which prohibits any act, practice, or course of
business if the mails or any means or instrumentality of
interstate commerce are used in connection therewith shall also
prohibit any such act, practice, or course of business by any
investment adviser registered pursuant to this section or any
person acting on behalf of such an investment adviser,
irrespective of any use of the mails or any means or
instrumentality of interstate commerce in connection therewith.
(e) The Commission, by order, shall censure, place
limitations on the activities, functions, or operations of,
suspend for a period not exceeding twelve months, or revoke the
registration of any investment adviser if it finds, on the
record after notice and opportunity for hearing, that such
censure, placing of limitations, suspension, or revocation is
in the public interest and that such investment adviser, or any
person associated with such investment adviser, whether prior
to or subsequent to becoming so associated--
(1) has willfully made or caused to be made in any
application for registration or report required to be
filed with the Commission under this title, or in any
proceeding before the Commission with respect to
registration, any statement which was at the time and
in the light of the circumstances under which it was
made false or misleading with respect to any material
fact, or has omitted to state in any such application
or report any material fact which is required to be
stated therein.
(2) has been convicted within ten years preceding the
filing of any application for registration or at any
time thereafter of any felony or misdemeanor or of a
substantially equivalent crime by a foreign court of
competent jurisdiction which the Commission finds--
(A) involves the purchase or sale of any
security, the taking of a false oath, the
making of a false report, bribery, perjury,
burglary, any substantially equivalent activity
however denominated by the laws of the relevant
foreign government, or conspiracy to commit any
such offense;
(B) arises out of the conduct of the business
of a broker, dealer, municipal securities
dealer, investment adviser, bank, insurance
company, government securities broker,
government securities dealer, fiduciary,
transfer agent, credit rating agency, foreign
person performing a function substantially
equivalent to any of the above, or entity or
person required to be registered under the
Commodity Exchange Act or any substantially
equivalent statute or regulation;
(C) involves the larceny, theft, robbery,
extortion, forgery, counterfeiting, fraudulent
concealment, embezzlement, fraudulent
conversion, or misappropriation of funds or
securities or substantially equivalent activity
however denominated by the laws of the relevant
foreign government; or
(D) involves the violation of section 152,
1341, 1342, or 1343 or chapter 25 or 47 of
title 18, United States Code, or a violation of
substantially equivalent foreign statute.
(3) has been convicted during the 10-year period
preceding the date of filing of any application for
registration, or at any time thereafter, of--
(A) any crime that is punishable by
imprisonment for 1 or more years, and that is
not described in paragraph (2); or
(B) a substantially equivalent crime by a
foreign court of competent jurisdiction.
(4) is permanently or temporarily enjoined by order,
judgment, or decree of any court of competent
jurisdiction, including any foreign court of competent
jurisdiction, from acting as an investment adviser,
underwriter, broker, dealer, municipal securities
dealer, government securities broker, government
securities dealer, transfer agent, credit rating
agency, foreign person performing a function
substantially equivalent to any of the above, or entity
or person required to be registered under the Commodity
Exchange Act or any substantially equivalent statute or
regulation, or as an affiliated person or employee of
any investment company, bank, insurance company,
foreign entity substantially equivalent to any of the
above, or entity or person required to be registered
under the Commodity Exchange Act or any substantially
equivalent statute or regulation, or from engaging in
or continuing any conduct or practice in connection
with any such activity, or in connection with the
purchase or sale of any security.
(5) has willfully violated any provision of the
Securities Act of 1933, the Securities Exchange Act of
1934, the Investment Company Act of 1940, this title,
the Commodity Exchange Act, or the rules or regulations
under any such statutes or any rule of the Municipal
Securities Rulemaking Board, or is unable to comply
with any such provision.
(6) has willfully aided, abetted, counseled,
commanded, induced, or procured the violation by any
other person of any provision of the Securities Act of
1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, this title, the
Commodity Exchange Act, the rules or regulations under
any of such statutes, or the rules of the Municipal
Securities Rulemaking Board, or has failed reasonably
to supervise, with a view to preventing violations of
the provisions of such statutes, rules, and
regulations, another person who commits such a
violation, if such other person is subject to his
supervision. For the purposes of this paragraph no
person shall be deemed to have failed reasonably to
supervise any person, if--
(A) there have been established procedures,
and a system for applying such procedures,
which would reasonably be expected to prevent
and detect, insofar as practicable, any such
violation by such other person, and
(B) such person has reasonably discharged the
duties and obligations incumbent upon him by
reason of such procedures and system without
reasonable cause to believe that such
procedures and system were not being complied
with.
(7) is subject to any order of the Commission barring
or suspending the right of the person to be associated
with an investment adviser;
(8) has been found by a foreign financial regulatory
authority to have--
(A) made or caused to be made in any
application for registration or report required
to be filed with a foreign securities
authority, or in any proceeding before a
foreign securities authority with respect to
registration, any statement that was at the
time and in light of the circumstances under
which it was made false or misleading with
respect to any material fact, or has omitted to
state in any application or report to a foreign
securities authority any material fact that is
required to be stated therein;
(B) violated any foreign statute or
regulation regarding transactions in securities
or contracts of sale of a commodity for future
delivery traded on or subject to the rules of a
contract market or any board of trade; or
(C) aided, abetted, counseled, commanded,
induced, or procured the violation by any other
person of any foreign statute or regulation
regarding transactions in securities or
contracts of sale of a commodity for future
delivery traded on or subject to the rules of a
contract market or any board of trade, or has
been found, by the foreign finanical regulatory
authority, to have failed reasonably to
supervise, with a view to preventing violations
of statutory provisions, and rules and
regulations promulgated thereunder, another
person who commits such a violation, if such
other person is subject to his supervision; or
(9) is subject to any final order of a State
securities commission (or any agency or officer
performing like functions), State authority that
supervises or examines banks, savings associations, or
credit unions, State insurance commission (or any
agency or office performing like functions), an
appropriate Federal banking agency (as defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813(q))), or the National Credit Union
Administration, that--
(A) bars such person from association with an
entity regulated by such commission, authority,
agency, or officer, or from engaging in the
business of securities, insurance, banking,
savings association activities, or credit union
activities; or
(B) constitutes a final order based on
violations of any laws or regulations that
prohibit fraudulent, manipulative, or deceptive
conduct.
(f) The Commission, by order, shall censure or place
limitations on the activities of any person associated, seeking
to become associated, or, at the time of the alleged
misconduct, associated or seeking to become associated with an
investment adviser, or suspend for a period not exceeding 12
months or bar any such person from being associated with an
investment adviser, broker, dealer, municipal securities
dealer, municipal advisor, transfer agent, or nationally
recognized statistical rating organization, if the Commission
finds, on the record after notice and opportunity for hearing,
that such censure, placing of limitations, suspension, or bar
is in the public interest and that such person has committed or
omitted any act or omission enumerated in paragraph (1), (5),
(6), (8), or (9) of subsection (e) or has been convicted of any
offense specified in paragraph (2) or (3) of subsection (e)
within ten years of the commencement of the proceedings under
this subsection, or is enjoined from any action, conduct, or
practice specified in paragraph (4) of subsection (e). It shall
be unlawful for any person as to whom such an order suspending
or barring him from being associated with an investment adviser
is in effect willfully to become, or to be, associated with an
investment adviser without the consent of the Commission, and
it shall be unlawful for any investment adviser to permit such
a person to become, or remain, a person associated with him
without the consent of the Commission, if such investment
adviser knew, or in the exercise of reasonable care, should
have known, of such order.
(g) Any successor to the business of an investment adviser
registered under this section shall be deemed likewise
registered hereunder, if within thirty days from its succession
to such business it shall file an application for registration
under this section, unless and until the Commission, pursuant
to subsection (c) or subsection (e) of this section, shall deny
registration to or revoke or suspend the registration of such
successor.
(h) Any person registered under this section may, upon such
terms and conditions as the Commission finds necessary in the
public interest or for the protection of investors, withdraw
from registration by filing a written notice of withdrawal with
the Commission. If the Commission finds that any person
registered under this section, or who has pending an
application for registration filed under this section, is no
longer in existence, is not engaged in business as an
investment adviser, or is prohibited from registering as an
investment adviser under section 203A, the Commission shall by
order cancel the registration of such person.
(i) Money Penalties in Administrative Proceedings.--
(1) Authority of commission.--
(A) In general.--In any proceeding instituted
pursuant to subsection (e) or (f) against any
person, the Commission may impose a civil
penalty if it finds, on the record after notice
and opportunity for hearing, that such penalty
is in the public interest and that such
person--
(i) has willfully violated any
provision of the Securities Act of
1933, the Securities Exchange Act of
1934, the Investment Company Act of
1940, or this title, or the rules or
regulations thereunder;
(ii) has willfully aided, abetted,
counseled, commanded, induced, or
procured such a violation by any other
person;
(iii) has willfully made or caused to
be made in any application for
registration or report required to be
filed with the Commission under this
title, or in any proceeding before the
Commission with respect to
registration, any statement which was,
at the time and in the light of the
circumstances under which it was made,
false or misleading with respect to any
material fact, or has omitted to state
in any such application or report any
material fact which was required to be
stated therein; or
(iv) has failed reasonably to
supervise, within the meaning of
subsection (e)(6), with a view to
preventing violations of the provisions
of this title and the rules and
regulations thereunder, another person
who commits such a violation, if such
other person is subject to his
supervision;
(B) Cease-and-desist proceedings.--In any
proceeding instituted pursuant to subsection
(k) against any person, the Commission may
impose a civil penalty if the Commission finds,
on the record, after notice and opportunity for
hearing, that such person--
(i) is violating or has violated any
provision of this title, or any rule or
regulation issued under this title; or
(ii) is or was a cause of the
violation of any provision of this
title, or any rule or regulation issued
under this title.
(2) Maximum amount of penalty.--
(A) First tier.--The maximum amount of
penalty for each act or omission described in
paragraph (1) shall be $5,000 for a natural
person or $50,000 for any other person.
(B) Second tier.--Notwithstanding
subparagraph (A), the maximum amount of penalty
for each such act or omission shall be $50,000
for a natural person or $250,000 for any other
person if the act or omission described in
paragraph (1) involved fraud, deceit,
manipulation, or deliberate or reckless
disregard of a regulatory requirement.
(C) Third tier.--Notwithstanding
subparagraphs (A) and (B), the maximum amount
of penalty for each such act or omission shall
be $100,000 for a natural person or $500,000
for any other person if--
(i) the act or omission described in
paragraph (1) involved fraud, deceit,
manipulation, or deliberate or reckless
disregard of a regulatory requirement;
and
(ii) such act or omission directly or
indirectly resulted in substantial
losses or created a significant risk of
substantial losses to other persons or
resulted in substantial pecuniary gain
to the person who committed the act or
omission.
(3) Determination of public interest.--In considering
under this section whether a penalty is in the public
interest, the Commission may consider--
(A) whether the act or omission for which
such penalty is assessed involved fraud,
deceit, manipulation, or deliberate or reckless
disregard of a regulatory requirement;
(B) the harm to other persons resulting
either directly or indirectly from such act or
omission;
(C) the extent to which any person was
unjustly enriched, taking into account any
restitution made to persons injured by such
behavior;
(D) whether such person previously has been
found by the Commission, another appropriate
regulatory agency, or a self-regulatory
organization to have violated the Federal
securities laws, State securities laws, or the
rules of a self-regulatory organization, has
been enjoined by a court of competent
jurisdiction from violations of such laws or
rules, or has been convicted by a court of
competent jurisdiction of violations of such
laws or of any felony or misdemeanor described
in section 203(e)(2) of this title;
(E) the need to deter such person and other
persons from committing such acts or omissions;
and
(F) such other matters as justice may
require.
(4) Evidence concerning ability to pay.--In any
proceeding in which the Commission may impose a penalty
under this section, a respondent may present evidence
of the respondent's ability to pay such penalty. The
Commission may, in its discretion, consider such
evidence in determining whether such penalty is in the
public interest. Such evidence may relate to the extent
of such person's ability to continue in business and
the collectability of a penalty, taking into account
any other claims of the United States or third parties
upon such person's assets and the amount of such
person's assets.
(j) Authority To Enter an Order Requiring an Accounting and
Disgorgement.--In any proceeding in which the Commission may
impose a penalty under this section, the Commission may enter
an order requiring accounting and disgorgement, including
reasonable interest. The Commission is authorized to adopt
rules, regulations, and orders concerning payments to
investors, rates of interest, periods of accrual, and such
other matters as it deems appropriate to implement this
subsection.
(k) Cease-and-Desist Proceedings.--
(1) Authority of the commission.--If the Commission
finds, after notice and opportunity for hearing, that
any person is violating, has violated, or is about to
violate any provision of this title, or any rule or
regulation thereunder, the Commission may publish its
findings and enter an order requiring such person, and
any other person that is, was, or would be a cause of
the violation, due to an act or omission the person
knew or should have known would contribute to such
violation, to cease and desist from committing or
causing such violation and any future violation of the
same provision, rule, or regulation. Such order may, in
addition to requiring a person to cease and desist from
committing or causing a violation, require such person
to comply, or to take steps to effect compliance, with
such provision, rule, or regulation, upon such terms
and conditions and within such time as the Commission
may specify in such order. Any such order may, as the
Commission deems appropriate, require future compliance
or steps to effect future compliance, either
permanently or for such period of time as the
Commission may specify, with such provision, rule, or
regulation with respect to any security, any issuer, or
any other person.
(2) Hearing.--The notice instituting proceedings
pursuant to paragraph (1) shall fix a hearing date not
earlier than 30 days nor later than 60 days after
service of the notice unless an earlier or a later date
is set by the Commission with the consent of any
respondent so served.
(3) Temporary order.--
(A) In general.--Whenever the Commission
determines that the alleged violation or
threatened violation specified in the notice
instituting proceedings pursuant to paragraph
(1), or the continuation thereof, is likely to
result in significant dissipation or conversion
of assets, significant harm to investors, or
substantial harm to the public interest,
including, but not limited to, losses to the
Securities Investor Protection Corporation,
prior to the completion of the proceedings, the
Commission may enter a temporary order
requiring the respondent to cease and desist
from the violation or threatened violation and
to take such action to prevent the violation or
threatened violation and to prevent dissipation
or conversion of assets, significant harm to
investors, or substantial harm to the public
interest as the Commission deems appropriate
pending completion of such proceedings. Such an
order shall be entered only after notice and
opportunity for a hearing, unless the
Commission, notwithstanding section 211(c) of
this title, determines that notice and hearing
prior to entry would be impracticable or
contrary to the public interest. A temporary
order shall become effective upon service upon
the respondent and, unless set aside, limited,
or suspended by the Commission or a court of
competent jurisdiction, shall remain effective
and enforceable pending the completion of the
proceedings.
(B) Applicability.--This paragraph shall
apply only to a respondent that acts, or, at
the time of the alleged misconduct acted, as a
broker, dealer, investment adviser, investment
company, municipal securities dealer,
government securities broker, government
securities dealer, or transfer agent, or is, or
was at the time of the alleged misconduct, an
associated person of, or a person seeking to
become associated with, any of the foregoing.
(4) Review of temporary orders.--
(A) Commission review.--At any time after the
respondent has been served with a temporary
cease-and-desist order pursuant to paragraph
(3), the respondent may apply to the Commission
to have the order set aside, limited, or
suspended. If the respondent has been served
with a temporary cease-and-desist order entered
without a prior Commission hearing, the
respondent may, within 10 days after the date
on which the order was served, request a
hearing on such application and the Commission
shall hold a hearing and render a decision on
such application at the earliest possible time.
(B) Judicial review.--Within--
(i) 10 days after the date the
respondent was served with a temporary
cease-and-desist order entered with a
prior Commission hearing, or
(ii) 10 days after the Commission
renders a decision on an application
and hearing under subparagraph (A),
with respect to any temporary cease-
and-desist order entered without a
prior Commission hearing,
the respondent may apply to the United States
district court for the district in which the
respondent resides or has its principal office
or place of business, or for the District of
Columbia, for an order setting aside, limiting,
or suspending the effectiveness or enforcement
of the order, and the court shall have
jurisdiction to enter such an order. A
respondent served with a temporary cease-and-
desist order entered without a prior Commission
hearing may not apply to the court except after
hearing and decision by the Commission on the
respondent's application under subparagraph (A)
of this paragraph.
(C) No automatic stay of temporary order.--
The commencement of proceedings under
subparagraph (B) of this paragraph shall not,
unless specifically ordered by the court,
operate as a stay of the Commission's order.
(D) Exclusive review.--Section 213 of this
title shall not apply to a temporary order
entered pursuant to this section.
(5) Authority to enter an order requiring an
accounting and disgorgement.--In any cease-and-desist
proceeding under paragraph (1), the Commission may
enter an order requiring accounting and disgorgement,
including reasonable interest. The Commission is
authorized to adopt rules, regulations, and orders
concerning payments to investors, rates of interest,
periods of accrual, and such other matters as it deems
appropriate to implement this subsection.
(l) Exemption of Venture Capital Fund Advisers.--
(1) In general.--No investment adviser that acts as
an investment adviser solely to 1 or more venture
capital funds shall be subject to the registration
requirements of this title with respect to the
provision of investment advice relating to a venture
capital fund. Not later than 1 year after the date of
enactment of this subsection, the Commission shall
issue final rules to define the term ``venture capital
fund'' for purposes of this subsection. 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.
(2) Advisers of sbics.--For purposes of this
subsection, a venture capital fund includes an entity
described in subparagraph (A), (B), or (C) of
subsection (b)(7) (other than an entity that has
elected to be regulated or is regulated as a business
development company pursuant to section 54 of the
Investment Company Act of 1940).
(3) Advisers of rbics.--For purposes of this
subsection, a venture capital fund includes an entity
described in subparagraph (A) or (B) of subsection
(b)(8) (other than an entity that has elected to be
regulated as a business development company pursuant to
section 54 of the Investment Company Act of 1940 (15
U.S.C. 80a-53)).
(m) Exemption of and Reporting by Certain Private Fund
Advisers.--
(1) In general.--The Commission shall provide an
exemption from the registration requirements under this
section to any investment adviser of private funds, if
each of such investment adviser acts solely as an
adviser to private funds and has assets under
management in the United States of less than
[$150,000,000] $175,000,000.
(2) Reporting.--The Commission shall require
investment advisers exempted by reason of this
subsection 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.
(3) Advisers of sbics.--For purposes of this
subsection, the assets under management of a private
fund that is an entity described in subparagraph (A),
(B), or (C) of subsection (b)(7) (other than an entity
that has elected to be regulated or is regulated as a
business development company pursuant to section 54 of
the Investment Company Act of 1940) shall be excluded
from the limit set forth in paragraph (1).
(4) Advisers of rbics.--For purposes of this
subsection, the assets under management of a private
fund that is an entity described in subparagraph (A) or
(B) of subsection (b)(8) (other than an entity that has
elected to be regulated or is regulated as a business
development company pursuant to section 54 of the
Investment Company Act of 1940 (15 U.S.C. 80a-53))
shall be excluded from the limit set forth in paragraph
(1).
(5) Inflation adjustment.--The Commission shall,
every 5 years, adjust the dollar amount described under
paragraph (1) to reflect the change in the Consumer
Price Index for All Urban Consumers published by the
Bureau of Labor Statistics of the Department of Labor,
and round such dollar amount to the nearest multiple of
$1,000,000.
(n) Registration and Examination of Mid-sized Private Fund
Advisers.--In prescribing regulations to carry out the
requirements of this section with respect to investment
advisers acting as investment advisers to mid-sized private
funds, the Commission shall take into account the size,
governance, and investment strategy of such funds to determine
whether they pose systemic risk, and shall provide for
registration and examination procedures with respect to the
investment advisers of such funds which reflect the level of
systemic risk posed by such funds.
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