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.

Summary: Private Fund Investment Advisers Registration Act of 2009 - (Sec. 3) Amends the Investment Advisers Act of 1940 to repeal the exemption for, and apply registration requirements to, a private fund investment adviser.

Exempts from such registration requirements, however, any investment adviser who solely advises: (1) small business investment companies licensed under the Small Business Investment Act of 1958; (2) entities that the Small Business Administration (SBA) has notified to proceed to qualify for a license, if the notice or license has not been revoked; or (3) applicants, related to one or more licensed small business investment companies, that have a pending application for another license.

(Sec. 4) Subjects to Securities Exchange Commission (SEC) recordkeeping requirements any registered investment adviser who advises private funds. Authorizes the SEC to make such records, especially those relating to systemic risk, available to the Board of Governors of the Federal Reserve System and any other entity that has systemic risk responsibility.

(Sec. 5) Repeals the declaration that no provision of such Act shall be construed to require, or to authorize the SEC to require, any investment adviser engaged in rendering investment supervisory services to disclose the identity, investments, or affairs of any client, except insofar as such disclosure may be necessary or appropriate in a particular proceeding or investigation having as its object the enforcement of a provision or provisions of the Act. (Thus, allows interpretation of the Act to require, or authorize the SEC to require, an investment adviser to disclose the identity, investments, or affairs of any client.)

(Sec. 6) Directs the SEC to exempt from the registration requirements of this Act: (1) venture capital fund advisers; and (2) investment advisers of private funds, each of which has assets under management in the United States of less than $150 million. Directs the SEC to require such advisers, however, to maintain records and make annual reports to the SEC.

(Sec. 7) Requires the SEC, in prescribing regulations for registration of advisers to mid-sized private funds, to: (1) take into account the size, governance, and investment strategy of such funds to determine whether they pose systemic risk; and (2) provide for registration and examination procedures for such advisers which reflect the level of systemic risk posed by the funds.

(Sec. 8) Modifies SEC rulemaking authority. Authorizes the SEC to ascribe different meanings to terms, but prohibits including in the term "client" an investor in a private fund managed by an investment adviser with whom the private fund has entered into an advisory contract.

Directs the SEC and the Commodity Futures Trading Commission (CFTC) to promulgate rules jointly for the mandatory reports filed by certain registered investment advisers.

(Sec. 9) Directs the Comptroller General to assess the annual costs on industry members and their investors because of the registration requirements and ongoing reporting requirements of this Act.

(Sec. 11) Amends the Investment Advisers Act of 1940 with respect to SEC authority to exempt any person or transaction (or any class or classes of them) from certain investment advisory contract requirements to the extent that the exemption relates to an investment advisory contract with any person that the Commission determines does not need the protections of such requirements. Requires the SEC, with respect to any factor involving a dollar amount test (e.g. a net asset threshold) it uses to make such a determination, to adjust that test for inflation every five years.

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 1940 (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 
        issuer that 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
            ``(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;
            (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; or''; and
            (5) by adding at the end the following:
            ``(7) any investment adviser who solely advises--
                    ``(A) small business investment companies licensed 
                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, which notice or license has not been 
                revoked; or
                    ``(C) applicants, related to one or more licensed 
                small business investment companies covered in 
                subparagraph (A), that have applied for another 
                license, which application remains pending.''.

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, taking into account the public 
        interest and potential to contribute to systemic risk, 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 in a manner 
        consistent with confidentiality established by the Commission 
        pursuant to paragraph (8).
            ``(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 (excluding any 
such fund whose adviser is exempt from registration pursuant to 
paragraph (7) of subsection (b)). 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. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND ADVISERS.

    Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3), as amended by section 6, is further amended by adding at the end 
the following new subsections:
    ``(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 
        private funds has assets under management in the United States 
        of less than $150,000,000.
            ``(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.
    ``(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.''.

SEC. 8. 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', except the Commission shall not ascribe a 
        meaning to the term `client' that would include an investor in 
        a private fund managed by an investment adviser, where such 
        private fund has entered into an advisory contract with such 
        adviser) 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 12 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(l) 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.).''.

SEC. 9. GAO STUDY.

    (a) Study Required.--The Comptroller General of the United States 
shall carry out a study to assess the annual costs on industry members 
and their investors due to the registration requirements and ongoing 
reporting requirements under this Act and the amendments made by this 
Act.
    (b) Report to the Congress.--Not later than the end of the 2-year 
period beginning on the date of the enactment of this Act, the 
Comptroller General of the United States shall submit a report to the 
Congress containing the findings and determinations made by the 
Comptroller General in carrying out the study required under subsection 
(a).

SEC. 10. EFFECTIVE DATE; TRANSITION PERIOD.

    (a) Effective Date.--This Act, and the amendments made by this Act, 
shall take effect with respect to investment advisers after the end of 
the 1-year period beginning on the date of the enactment of this Act.
    (b) Transition Period.--The Securities and Exchange Commission 
shall prescribe rules and regulations to permit an investment adviser 
who will be required to register with the Securities and Exchange 
Commission by reason of this Act with the option of registering with 
the Securities and Exchange Commission before the date described under 
subsection (a).

SEC. 11. QUALIFIED CLIENT STANDARD.

    Section 205(e) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-5(e)) is amended by adding at the end the following: ``With respect 
to any factor used by the Commission in making a determination under 
this subsection, if the Commission uses a dollar amount test in 
connection with such factor, such as a net asset threshold, the 
Commission shall, not later than one year after the date of the 
enactment of the Private Fund Investment Advisers Registration Act of 
2009, and every 5 years thereafter, adjust for the effects of inflation 
on such test. Any such adjustment that is not a multiple of $1,000 
shall be rounded to the nearest multiple of $1,000.''.