The Treasury Department has released proposed legislation that would require registration under the Investment Advisers Act – as well as substantial disclosure obligations – for most managers of private investment funds, including venture capital and private equity funds. The Private Fund Investment Advisers Registration Act of 2009 would eliminate the exemption from investment adviser registration generally relied on by managers of private investment funds. 1 It would also require fund managers to provide the Securities and Exchange Commission detailed information about the operation of those funds. The Investor Protection Act of 2009 would give very broad discretion to the SEC to impose new compliance and disclosure requirements on all investment advisers, whether or not registered, that would not be limited to “retail” clients. 2

Coming from the Obama Administration, these proposals will likely supersede the three previous bills already in the legislative process. All the proposals address the same principal regulatory interest: providing regulators with better information about fund activities. Because they would trigger registration for private fund managers, they would also result in additional compliance burdens. One of those earlier bills takes a somewhat different approach – requiring registration of private funds as well as their managers – and SEC representatives have stated that this is also under consideration.

The following table (click here) summarizes the aspects of the Treasury proposals that are of most interest to U.S. private fund managers and compares the proposed Hedge Fund Transparency Act (S. 344), introduced by Senators Chuck Grassley and Carl Levin in January 2009.