Synopsis: On July 15, 2009, the Obama Administration delivered the "Private Fund Investment Advisers Registration Act of 2009" to Congress for its consideration. If enacted, the proposed legislation would require the registration of investment advisers previously exempt from registration by eliminating the portion of Section 203(b)(3) of the Investment Advisers Act of 1940 that currently exempts from registration investment advisers that have fewer than fifteen clients and that do not hold themselves out to the public as investment advisers. For investment advisers that advise “private funds” (e.g., hedge funds, private equity funds and venture capital funds), the proposed legislation would also eliminate the “intrastate” and the “CTA” exemptions from registration under the Advisers Act. Additionally, the proposed legislation would (i) impose detailed record-keeping and reporting requirements relating to registered investment advisers and any “private funds” they advise, and (ii) clarify the SEC’s rulemaking authority, including granting the SEC the ability to ascribe different meanings to terms used in the Advisers Act, such as the term “client.” The Lowenstein Sandler Investment Management Group Client Alert issued July 17, 2009 summarizes and analyzes this proposed legislation and its potential impact. The full text of the official proposal is available here.

Status: The proposed legislation was delivered to Congress on July 15, 2009 and is currently under consideration.