I 

111TH CONGRESS 

1ST SESSION H. R. 3818 

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. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 15, 2009 

Mr. KANJORSKI introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Private Fund Invest5 ment Advisers Registration Act of 2009’’. 


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1 SEC. 2. DEFINITIONS. 

2 Section 202(a) of the Investment Advisers Act of 

3 1934 (15 U.S.C. 80b–2(a)) is amended by adding at the 

4 end the following new paragraphs: 

5 ‘‘(29) PRIVATE FUND.—The term ‘private fund’ 

6 means an investment fund that— 

7 ‘‘(A) would be an investment company 

8 under section 3(a) of the Investment Company 

9 Act of 1940 (15 U.S.C. 80a–3(a)) but for the 

10 exception provided from that definition by ei11 ther section 3(c)(1) or section 3(c)(7) of such 

12 Act; and 

13 ‘‘(B) either— 

14 ‘‘(i) is organized or otherwise created 

15 under the laws of the United States or of 

16 a State; or 

17 ‘‘(ii) has 10 percent or more of its 

18 outstanding securities by value owned by 

19 United States persons. 

20 ‘‘(30) FOREIGN PRIVATE FUND ADVISER.—The 

21 term ‘foreign private fund adviser’ means an invest22 ment adviser who— 

23 ‘‘(A) has no place of business in the 

24 United States; 

25 ‘‘(B) during the preceding 12 months has 

26 had— 


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1 ‘‘(i) fewer than 15 clients in the 

2 United States; and 

3 ‘‘(ii) assets under management attrib4 utable to clients in the United States of 

5 less than $25,000,000, or such higher 

6 amount as the Commission may, by rule, 

7 deem appropriate in the public interest or 

8 for the protection of investors; and 

9 ‘‘(C) neither holds itself out generally to 

10 the public in the United States as an invest11 ment adviser, nor acts as an investment adviser 

12 to any investment company registered under the 

13 Investment Company Act of 1940, or a com14 pany which has elected to be a business devel15 opment company pursuant to section 54 of the 

16 Investment Company Act of 1940 (15 U.S.C. 

17 80a–53) and has not withdrawn such election.’’. 

18 SEC. 3. ELIMINATION OF PRIVATE ADVISER EXEMPTION; 

19 LIMITED EXEMPTION FOR FOREIGN PRIVATE 

20 FUND ADVISERS; LIMITED INTRASTATE EX21 EMPTION. 

22 Section 203(b) of the Investment Advisers Act of 

23 1940 (15 U.S.C. 80b–3(b)) is amended— 

24 (1) in paragraph (1), by inserting ‘‘, except an 

25 investment adviser who acts as an investment adVerDate Nov 24 2008 05:05 Oct 16, 2009 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3818.IH H3818

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1 viser to any private fund,’’ after ‘‘any investment ad2 viser’’; 

3 (2) by amending paragraph (3) to read as fol4 lows: 

5 ‘‘(3) any investment adviser that is a foreign 

6 private fund adviser;’’; 

7 (3) in paragraph (5), by striking ‘‘or’’ at the 

8 end; and 

9 (4) in paragraph (6)— 

10 (A) in subparagraph (A), by striking ‘‘or’’; 

11 (B) in subparagraph (B), by striking the 

12 period at the end and adding ‘‘; or’’; and 

13 (C) by adding at the end the following new 

14 subparagraph: 

15 ‘‘(C) a private fund.’’. 

16 SEC. 4. COLLECTION OF SYSTEMIC RISK DATA. 

17 Section 204 of the Investment Advisers Act of 1940 

18 (15 U.S.C. 80b–4) is amended— 

19 (1) by redesignating subsections (b) and (c) as 

20 subsections (c) and (d), respectively; and 

21 (2) by inserting after subsection (a) the fol22 lowing new subsection: 

23 ‘‘(b) RECORDS AND REPORTS OF PRIVATE FUNDS.— 

24 ‘‘(1) IN GENERAL.—The Commission is author25 ized to require any investment adviser registered 


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1 under this Act to maintain such records of and file 

2 with the Commission such reports regarding private 

3 funds advised by the investment adviser as are nec4 essary or appropriate in the public interest and for 

5 the protection of investors or for the assessment of 

6 systemic risk as the Commission determines in con7 sultation with the Board of Governors of the Federal 

8 Reserve System. The Commission is authorized to 

9 provide or make available to the Board of Governors 

10 of the Federal Reserve System, and to any other en11 tity that the Commission identifies as having sys12 temic risk responsibility, those reports or records or 

13 the information contained therein. The records and 

14 reports of any private fund, to which any such in15 vestment adviser provides investment advice, main16 tained or filed by an investment adviser registered 

17 under this Act, shall be deemed to be the records 

18 and reports of the investment adviser. 

19 ‘‘(2) REQUIRED INFORMATION.—The records 

20 and reports required to be maintained or filed with 

21 the Commission under this subsection shall include, 

22 for each private fund advised by the investment ad23 viser— 

24 ‘‘(A) the amount of assets under manage25 ment; 


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1 ‘‘(B) the use of leverage (including off-bal2 ance sheet leverage); 

3 ‘‘(C) counterparty credit risk exposures; 

4 ‘‘(D) trading and investment positions; 

5 ‘‘(E) trading practices; and 

6 ‘‘(F) such other information as the Com7 mission, in consultation with the Board of Gov8 ernors of the Federal Reserve System, deter9 mines necessary or appropriate in the public in10 terest and for the protection of investors or for 

11 the assessment of systemic risk. 

12 ‘‘(3) OPTIONAL INFORMATION.—The Commis13 sion may require the reporting of such additional in14 formation from private fund advisers as the Com15 mission determines necessary. In making such deter16 mination, the Commission may set different report17 ing requirements for different classes of private fund 

18 advisers, based on the particular types or sizes of 

19 private funds advised by such advisers. 

20 ‘‘(4) MAINTENANCE OF RECORDS.—An invest21 ment adviser registered under this Act is required to 

22 maintain and keep such records of private funds ad23 vised by the investment adviser for such period or 

24 periods as the Commission, by rule or regulation, 

25 may prescribe as necessary or appropriate in the 


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1 public interest and for the protection of investors or 

2 for the assessment of systemic risk. 

3 ‘‘(5) EXAMINATION OF RECORDS.— 

4 ‘‘(A) PERIODIC AND SPECIAL EXAMINA5 TIONS.—All records of a private fund main6 tained by an investment adviser registered 

7 under this Act shall be subject at any time and 

8 from time to time to such periodic, special, and 

9 other examinations by the Commission, or any 

10 member or representative thereof, as the Com11 mission may prescribe. 

12 ‘‘(B) AVAILABILITY OF RECORDS.—An in13 vestment adviser registered under this Act shall 

14 make available to the Commission or its rep15 resentatives any copies or extracts from such 

16 records as may be prepared without undue ef17 fort, expense, or delay as the Commission or its 

18 representatives may reasonably request. 

19 ‘‘(6) INFORMATION SHARING.—The Commission 

20 shall make available to the Board of Governors of 

21 the Federal Reserve System, and to any other entity 

22 that the Commission identifies as having systemic 

23 risk responsibility, copies of all reports, documents, 

24 records, and information filed with or provided to 

25 the Commission by an investment adviser under this 


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1 subsection as the Board, or such other entity, may 

2 consider necessary for the purpose of assessing the 

3 systemic risk of a private fund. All such reports, 

4 documents, records, and information obtained by the 

5 Board, or such other entity, from the Commission 

6 under this subsection shall be kept confidential. 

7 ‘‘(7) DISCLOSURES OF CERTAIN PRIVATE FUND

8 INFORMATION.—An investment adviser registered 

9 under this Act shall provide such reports, records, 

10 and other documents to investors, prospective inves11 tors, counterparties, and creditors, of any private 

12 fund advised by the investment adviser as the Com13 mission, by rule or regulation, may prescribe as nec14 essary or appropriate in the public interest and for 

15 the protection of investors or for the assessment of 

16 systemic risk. 

17 ‘‘(8) CONFIDENTIALITY OF REPORTS.—Not18 withstanding any other provision of law, the Com19 mission shall not be compelled to disclose any report 

20 or information contained therein required to be filed 

21 with the Commission under this subsection. Nothing 

22 in this paragraph shall authorize the Commission to 

23 withhold information from the Congress or prevent 

24 the Commission from complying with a request for 

25 information from any other Federal department or 


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1 agency or any self-regulatory organization requesting 

2 the report or information for purposes within the 

3 scope of its jurisdiction, or complying with an order 

4 of a court of the United States in an action brought 

5 by the United States or the Commission. For pur6 poses of section 552 of title 5, United States Code, 

7 this paragraph shall be considered a statute de8 scribed in subsection (b)(3)(B) of such section.’’. 

9 SEC. 5. ELIMINATION OF DISCLOSURE PROVISION. 

10 Section 210 of the Investment Advisers Act of 1940 

11 (15 U.S.C. 80b–10) is amended by striking subsection (c). 

12 SEC. 6. EXEMPTION OF AND REPORTING BY VENTURE CAP13 ITAL FUND ADVISERS. 

14 Section 203 of the Investment Advisers Act of 1940 

15 (15 U.S.C. 80b–3) is amended by adding at the end the 

16 following new subsection: 

17 ‘‘(l) EXEMPTION OF AND REPORTING BY VENTURE

18 CAPITAL FUND ADVISERS.—The Commission shall iden19 tify and define the term ‘venture capital fund’ and shall 

20 provide an adviser to such a fund an exemption from the 

21 registration requirements under this section. The Commis22 sion shall require such advisers to maintain such records 

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1 priate in the public interest or for the protection of inves2 tors.’’. 

3 SEC. 7. CLARIFICATION OF RULEMAKING AUTHORITY. 

4 Section 211 of the Investment Advisers Act of 1940 

5 (15 U.S.C. 80b–11) is amended— 

6 (1) by amending subsection (a) to read as fol7 lows: 

8 ‘‘(a) The Commission shall have authority from time 

9 to time to make, issue, amend, and rescind such rules and 

10 regulations and such orders as are necessary or appro11 priate to the exercise of the functions and powers con12 ferred upon the Commission elsewhere in this title, includ13 ing rules and regulations defining technical, trade, and 

14 other terms used in this title. For the purposes of its rules 

15 and regulations, the Commission may— 

16 ‘‘(1) classify persons and matters within its ju17 risdiction based upon, but not limited to— 

18 ‘‘(A) size; 

19 ‘‘(B) scope; 

20 ‘‘(C) business model; 

21 ‘‘(D) compensation scheme; or 

22 ‘‘(E) potential to create or increase sys23 temic risk; 

24 ‘‘(2) prescribe different requirements for dif25 ferent classes of persons or matters; and 


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1 ‘‘(3) ascribe different meanings to terms (in2 cluding the term ‘client’) used in different sections 

3 of this title as the Commission determines necessary 

4 to effect the purposes of this title.’’; and 

5 (2) by adding at the end the following new sub6 section: 

7 ‘‘(e) The Commission and the Commodity Futures 

8 Trading Commission shall, after consultation with the 

9 Board of Governors of the Federal Reserve System, within 

10 6 months after the date of enactment of the Private Fund 

11 Investment Advisers Registration Act of 2009, jointly pro12 mulgate rules to establish the form and content of the re13 ports required to be filed with the Commission under sec14 tions 203(i) and 204(b) and with the Commodity Futures 

15 Trading Commission by investment advisers that are reg16 istered both under the Investment Advisers Act of 1940 

17 (15 U.S.C. 80b–1 et seq.) and the Commodity Exchange 

18 Act (7 U.S.C. 1 et seq.).’’. 

Æ 


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