House approves bill to ease SEC registration for private-equity advisers

Effort to thwart Dodd-Frank provision has prompted White House veto threat.
DEC 10, 2013
The House approved a bill on Wednesday that would exempt many investment advisers to private-equity funds from oversight by the Securities and Exchange Commission. The Republican-led chamber passed legislation, 254-159, that removes the SEC registration requirement for funds that haven't borrowed money and don't have outstanding principal that exceeds their invested capital by two times. The measure is aimed at a provision of the Dodd-Frank financial reform law that compels private funds with more than $150 million in assets under management to register with the SEC. The White House has threatened to veto the bill. Senate Democrats, who hold the majority in that chamber, haven't expressed any interest in legislation that would undo parts of the financial reform law. Since January 2012, more than 1,600 private fund advisers have registered with the SEC for the first time. Dodd-Frank extended SEC oversight to private-equity funds in order to better monitor systemic risk to the financial system that the opaque vehicles might pose. Both Democratic and Republican lawmakers said that the SEC should concentrate on regulating advisers who work with retail clients instead of devoting time and effort to overseeing private funds that are open only to accredited investors who meet certain income and net worth thresholds. “While I wholeheartedly support the SEC's mission to protect investors, the agency's limited resources should be devoted first and foremost to protecting less sophisticated, retail 'mom and pop' investors who need this protection the most,” said Rep. Scott Garrett, R-N.J., chairman of the House Financial Services subcommittee on capital markets. In an Oct. 4 letter to him, SEC Chairman Mary Jo White said that the commission had conducted 132 so-called presence examinations on private-equity advisers, with 62 still under way at that time. “This initiative involved about 10% of the SEC's exam resources, allowing [National Exam Program] staff to reach more private-fund advisers while not significantly detracting from the examination of retail firms,” she wrote. Supporters of the House bill called the Dodd-Frank provision regulatory overreach, arguing that private equity wasn't the cause of the 2008 financial crisis. They asserted that SEC registration costs crimp the funds' ability to help small businesses grow and create jobs at a time when economic growth is sluggish. “Capital investments from private equity are more important than ever,” Rep. Robert Hurt, R-Va., the bill's sponsor, said during the floor debate. The legislation drew support from 36 House Democrats. “This is a bipartisan job-creation opportunity,” said Rep. Jim Cooper, D-Tenn. But most House Democrats opposed the measure, arguing that it would exempt almost all private-equity funds from SEC oversight because the funds themselves don't pile up debt. Rather, they dump debt on the companies they target. The bill created a “gaping loophole” in regulatory oversight, said Rep. Stephen Lynch, D-Mass. “Systemic risk grows in the dark corners of our markets,” he said. “The more information we can gather, the safer we will be.”

Latest News

People moves: XYPN president Vince Hockett to retire in 2027
People moves: XYPN president Vince Hockett to retire in 2027

Also, SEI names LPL’s Kristie Edling-Day as CIO, TD Bank U.S. taps Hardeep Walia to lead wealth, and BMO adds an Illinois regional president

Family offices poured $68.3B into AI and RIA deals in Q3 2026
Family offices poured $68.3B into AI and RIA deals in Q3 2026

FINTRX data shows 342 company transactions in the quarter, with wealth management consolidation driving nearly one in seven deals.

Wells Fargo and Merrill Lynch settle excessive commissions probe
Wells Fargo and Merrill Lynch settle excessive commissions probe

State regulators secure $4.4 million from two broker-dealers over unreasonable charges on small-dollar retail equity trades.

The straight-line retirement is over. Here’s what comes next
The straight-line retirement is over. Here’s what comes next

New F&G survey finds most pre-retirees are delaying or redesigning retirement, creating fresh planning opportunities for financial advisors.

Trump Accounts face midterm test as rules shift, warns Focus exec
Trump Accounts face midterm test as rules shift, warns Focus exec

Focus Partners Wealth’s Jeffrey Levine says a Democratic House or Senate would make new legislation on Trump Accounts much harder to pass

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor