Secretary, in the case of an exchange of an interest 
in a publicly traded partnership (as defined in sec-
tion 7704) to which subsection (a) applies— 
‘‘(A) this section shall be applied without 
regard to subsections (a)(3), (b)(1)(A)(iii), and 
(f)(3), and 
‘‘(B) such partnership shall be treated as 
owning its proportionate share of the property 
of any other partnership in which it is a part-
ner. 
‘‘(4) RECOGNITION OF GAINS.—Any gain with 
respect to which subsection (a) applies by reason of 
paragraph (3) thereof shall be recognized notwith-
standing any other provision of this title. 
‘‘(5) 
COORDINATION
WITH
INVENTORY 
ITEMS.—An investment services partnership interest 
held by the partnership shall not be treated as an 
inventory item of the partnership. 
‘‘(6) PREVENTION
OF
DOUBLE
COUNTING.— 
Under regulations or other guidance prescribed by 
the Secretary, subsection (a)(3) shall not apply with 
respect to any amount to which section 710 applies. 
‘‘(7) VALUATION
METHODS.—The Secretary 
shall prescribe regulations or other guidance which 
provide the acceptable methods for valuing invest-
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ment services partnership interests for purposes of 
this section.’’. 
(c) TREATMENT
FOR
PURPOSES
OF
SECTION 
7704.—Subsection (d) of section 7704 is amended by add-
ing at the end the following new paragraph: 
‘‘(6) INCOME FROM CERTAIN CARRIED INTER-
ESTS NOT QUALIFIED.— 
‘‘(A) IN GENERAL.—Specified carried in-
terest income shall not be treated as qualifying 
income. 
‘‘(B) SPECIFIED
CARRIED
INTEREST
IN-
COME.—For purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘speci-
fied carried interest income’ means— 
‘‘(I) any item of income or gain 
allocated to an investment services 
partnership interest (as defined in 
section 710(c)) held by the partner-
ship, 
‘‘(II) any gain on the disposition 
of an investment services partnership 
interest (as so defined) or a partner-
ship interest to which (in the hands of 
the partnership) section 751 applies, 
and 
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‘‘(III) any income or gain taken 
into account by the partnership under 
subsection (b)(4) or (e) of section 
710. 
‘‘(ii) EXCEPTION FOR QUALIFIED CAP-
ITAL
INTERESTS.—A rule similar to the 
rule of section 710(d) shall apply for pur-
poses of clause (i). 
‘‘(C) COORDINATION WITH OTHER PROVI-
SIONS.—Subparagraph (A) shall not apply to 
any item described in paragraph (1)(E) (or so 
much of paragraph (1)(F) as relates to para-
graph (1)(E)). 
‘‘(D) SPECIAL RULES FOR CERTAIN PART-
NERSHIPS.— 
‘‘(i) CERTAIN PARTNERSHIPS OWNED 
BY REAL ESTATE INVESTMENT TRUSTS.— 
Subparagraph (A) shall not apply in the 
case of a partnership which meets each of 
the following requirements: 
‘‘(I) Such partnership is treated 
as publicly traded under this section 
solely by reason of interests in such 
partnership being convertible into in-
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terests in a real estate investment 
trust which is publicly traded. 
‘‘(II) Fifty percent or more of 
the capital and profits interests of 
such partnership are owned, directly 
or indirectly, at all times during the 
taxable year by such real estate in-
vestment trust (determined with the 
application of section 267(c)). 
‘‘(III) Such partnership meets 
the requirements of paragraphs (2), 
(3), and (4) of section 856(c). 
‘‘(ii) CERTAIN
PARTNERSHIPS
OWN-
ING OTHER PUBLICLY TRADED PARTNER-
SHIPS.—Subparagraph (A) shall not apply 
in the case of a partnership which meets 
each of the following requirements: 
‘‘(I) Substantially all of the as-
sets of such partnership consist of in-
terests in one or more publicly traded 
partnerships (determined without re-
gard to subsection (b)(2)). 
‘‘(II) Substantially all of the in-
come of such partnership is ordinary 
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income or section 1231 gain (as de-
fined in section 1231(a)(3)). 
‘‘(E) 
TRANSITIONAL
RULE.—Subpara-
graph (A) shall not apply to any taxable year 
of the partnership beginning before the date 
which is 10 years after the date of enactment 
of this paragraph.’’. 
(d) IMPOSITION
OF
PENALTY
ON
UNDERPAY-
MENTS.— 
(1) IN
GENERAL.—Subsection (b) of section 
6662 is amended by inserting after paragraph (8) 
the following new paragraph: 
‘‘(9) The application of section 710(e) or the 
regulations or other guidance prescribed under sec-
tion 710(g) to prevent the avoidance of the purposes 
of section 710.’’. 
(2) AMOUNT OF PENALTY.— 
(A) IN GENERAL.—Section 6662 is amend-
ed by adding at the end the following new sub-
section: 
‘‘(l) INCREASE IN PENALTY IN CASE OF PROPERTY 
TRANSFERRED FOR INVESTMENT MANAGEMENT SERV-
ICES.—In the case of any portion of an underpayment to 
which this section applies by reason of subsection (b)(9), 
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subsection (a) shall be applied with respect to such portion 
by substituting ‘40 percent’ for ‘20 percent’.’’. 
(B) CONFORMING AMENDMENT.—Subpara-
graph (B) of section 6662A(e)(2) is amended 
by striking ‘‘or (i)’’ and inserting ‘‘, (i), or (l)’’. 
(3) SPECIAL RULES FOR APPLICATION OF REA-
SONABLE CAUSE EXCEPTION.—Subsection (c) of sec-
tion 6664 is amended— 
(A) by redesignating paragraphs (3) and 
(4) as paragraphs (4) and (5), respectively; 
(B) by striking ‘‘paragraph (3)’’ in para-
graph (5)(A), as so redesignated, and inserting 
‘‘paragraph (4)’’; and 
(C) by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) SPECIAL RULE FOR UNDERPAYMENTS AT-
TRIBUTABLE TO INVESTMENT MANAGEMENT SERV-
ICES.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to any portion of an underpayment to 
which section 6662 applies by reason of sub-
section (b)(9) unless— 
‘‘(i) the relevant facts affecting the 
tax treatment of the item are adequately 
disclosed, 
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‘‘(ii) there is or was substantial au-
thority for such treatment, and 
‘‘(iii) the taxpayer reasonably believed 
that such treatment was more likely than 
not the proper treatment. 
‘‘(B) RULES
RELATING
TO
REASONABLE 
BELIEF.—Rules similar to the rules of sub-
section (d)(4) shall apply for purposes of sub-
paragraph (A)(iii).’’. 
(e) INCOME AND LOSS FROM INVESTMENT SERVICES 
PARTNERSHIP INTERESTS TAKEN INTO ACCOUNT IN DE-
TERMINING NET EARNINGS FROM SELF-EMPLOYMENT.— 
(1) INTERNAL REVENUE CODE.— 
(A) IN
GENERAL.—Section 1402(a) is 
amended by striking ‘‘and’’ at the end of para-
graph (16), by striking the period at the end of 
paragraph (17) and inserting ‘‘; and’’, and by 
inserting after paragraph (17) the following 
new paragraph: 
‘‘(18) notwithstanding the preceding provisions 
of this subsection, in the case of any individual en-
gaged in the trade or business of providing services 
described in section 710(c)(2) with respect to any 
entity, investment services partnership income or 
loss (as defined in subsection (m)) of such individual 
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with respect to such entity shall be taken into ac-
count in determining the net earnings from self-em-
ployment of such individual.’’. 
(B) INVESTMENT SERVICES PARTNERSHIP 
INCOME OR LOSS.—Section 1402 is amended by 
adding at the end the following new subsection: 
‘‘(m) INVESTMENT SERVICES PARTNERSHIP INCOME 
OR LOSS.—For purposes of subsection (a)— 
‘‘(1) IN GENERAL.—The term ‘investment serv-
ices partnership income or loss’ means, with respect 
to any investment services partnership interest (as 
defined in section 710(c)) or disqualified interest (as 
defined in section 710(e)), the net of— 
‘‘(A) the amounts treated as ordinary in-
come or ordinary loss under subsections (b) and 
(e) of section 710 with respect to such interest, 
‘‘(B) all items of income, gain, loss, and 
deduction allocated to such interest, and 
‘‘(C) the amounts treated as realized from 
the sale or exchange of property other than a 
capital asset under section 751 with respect to 
such interest. 
‘‘(2) EXCEPTION FOR QUALIFIED CAPITAL IN-
TERESTS.—A rule similar to the rule of section 
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710(d) shall apply for purposes of applying para-
graph (1)(B).’’. 
(2) SOCIAL SECURITY ACT.—Section 211(a) of 
the Social Security Act is amended by striking 
‘‘and’’ at the end of paragraph (15), by striking the 
period at the end of paragraph (16) and inserting ‘‘; 
and’’, and by inserting after paragraph (16) the fol-
lowing new paragraph: 
‘‘(17) Notwithstanding the preceding provisions 
of this subsection, in the case of any individual en-
gaged in the trade or business of providing services 
described in section 710(c)(2) of the Internal Rev-
enue Code of 1986 with respect to any entity, invest-
ment services partnership income or loss (as defined 
in section 1402(m) of such Code) shall be taken into 
account in determining the net earnings from self- 
employment of such individual.’’. 
(f) SEPARATE ACCOUNTING BY PARTNER.—Section 
702(a) is amended by striking ‘‘and’’ at the end of para-
graph (7), by striking the period at the end of paragraph 
(8) and inserting ‘‘, and’’, and by inserting after para-
graph (8) the following: 
‘‘(9) any amount treated as ordinary income or 
loss under subsection (a), (b), or (e) of section 
710.’’. 
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(g) CONFORMING AMENDMENTS.— 
(1) Subsection (d) of section 731 is amended by 
inserting ‘‘section 710(b)(4) (relating to distribu-
tions of partnership property),’’ after ‘‘to the extent 
otherwise provided by’’. 
(2) Section 741 is amended by inserting ‘‘or 
section 710 (relating to special rules for partners 
providing investment management services to part-
nerships)’’ before the period at the end. 
(3) The table of sections for part I of sub-
chapter K of chapter 1 is amended by adding at the 
end the following new item: 
‘‘Sec. 710. Special rules for partners providing investment management services 
to partnerships.’’. 
(4)(A) Part IV of subchapter O of chapter 1 is 
amended by striking section 1061. 
(B) The table of sections for part IV of sub-
chapter O of chapter 1 is amended by striking the 
item relating to section 1061. 
(h) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years ending after 
the date of enactment of this Act. 
(2) PARTNERSHIP TAXABLE YEARS WHICH IN-
CLUDE
EFFECTIVE
DATE.—In applying section 
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710(a) of the Internal Revenue Code of 1986 (as 
added by this section) in the case of any partnership 
taxable year which includes the date of enactment of 
this Act, the amount of the net capital gain referred 
to in such section shall be treated as being the lesser 
of the net capital gain for the entire partnership tax-
able year or the net capital gain determined by only 
taking into account items attributable to the portion 
of the partnership taxable year which is after such 
date. 
(3) DISPOSITIONS
OF
PARTNERSHIP
INTER-
ESTS.— 
(A) IN GENERAL.—Section 710(b) of such 
Code (as added by this section) shall apply to 
dispositions and distributions after the date of 
enactment of this Act. 
(B) INDIRECT DISPOSITIONS.—The amend-
ments made by subsection (b) shall apply to 
transactions after the date of enactment of this 
Act. 
(4) OTHER INCOME AND GAIN IN CONNECTION 
WITH INVESTMENT MANAGEMENT SERVICES.—Sec-
tion 710(e) of such Code (as added by this section) 
shall take effect on the date of enactment of this 
Act. 
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TITLE 
V—INVESTOR 
PROTEC-
TION AND MARKET TRANS-
PARENCY 
SEC. 501. DISCLOSURE OF FEES AND RETURNS. 
The Investment Company Act of 1940 (15 U.S.C. 
80a–1 et seq.) is amended by adding at the end the fol-
lowing: 
‘‘SEC. 66. DISCLOSURE OF FEES AND RETURNS. 
‘‘(a) DEFINITIONS.—In this section, the terms ‘pri-
vate fund’ and ‘target firm’ have the meanings given the 
terms in section 3 of the Stop Wall Street Looting Act. 
‘‘(b) RULES.—Not later than 1 year after the date 
of enactment of this section, the Commission shall issue 
final rules that require a private fund to, using generally 
accepted accounting principles, annually report the fol-
lowing information with respect to that private fund: 
‘‘(1) The name, address, and vintage year of 
the fund. 
‘‘(2) The name of each general partner of the 
fund. 
‘‘(3) The name of each limited partner of the 
fund. 
‘‘(4) A list of each entity with respect to which 
the fund owns a percentage. 
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‘‘(5) In dollars, the total amount of regulatory 
assets under management by the fund. 
‘‘(6) In dollars, the total amount of net assets 
under management by the fund. 
‘‘(7) The percentage of fund equity contributed 
by the general partners of the fund and the percent-
age of fund equity contributed by the limited part-
ners of the fund. 
‘‘(8) Information on the debt held by the fund, 
including— 
‘‘(A) the dollar amount of total debt; 
‘‘(B) the percentage of debt for which the 
creditor is a financial institution in the United 
States; 
‘‘(C) the percentage of debt for which the 
creditor is a financial institution outside of the 
United States; 
‘‘(D) the percentage of debt for which the 
creditor is an entity that is located in the 
United States and is not a financial institution; 
and 
‘‘(E) the percentage of debt for which the 
creditor is an entity that is located outside of 
the United States and is not a financial institu-
tion. 
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‘‘(9) The gross performance of the fund during 
the year covered by the report. 
‘‘(10) For the year covered by the report, the 
difference obtained by subtracting the financial 
gains of the fund by the fees that the general part-
ners of the fund charged to the limited partners of 
the fund (commonly referred to as the ‘performance 
net of fees’). 
‘‘(11) For the year covered by the report, an 
annual financial statement, which shall include in-
come statements, a balance sheet, and cash flow 
statements. 
‘‘(12) The average debt-to-equity ratio of each 
target firm with respect to the fund and the debt- 
to-equity ratio of each such target firm. 
‘‘(13) The total gross asset value of each target 
firm with respect to the fund and the gross asset 
value of each such target firm. 
‘‘(14) The total amount of debt held by each 
target firm with respect to the fund and the total 
amount of debt held by each such target firm. 
‘‘(15) The total amount of debt held by each 
target firm with respect to the fund that, as of the 
date on which the report is submitted, are cat-
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egorized as liabilities, long-term liabilities, and pay-
ment in kind or zero coupon debt. 
‘‘(16) The total number of target firms with re-
spect to the fund that experienced default during the 
period covered by the report, including the name of 
any such target firm. 
‘‘(17) The total number of the target firms with 
respect to the fund with respect to which a case was 
commenced under title 11, United States Code, dur-
ing the period covered by the report, including the 
name of any such target firm. 
‘‘(18) The percentage of the equity of the fund 
that is owned by— 
‘‘(A) citizens of the United States; 
‘‘(B) individuals who are not citizens of the 
United States; 
‘‘(C) brokers or dealers; 
‘‘(D) insurance companies; 
‘‘(E) investment companies that are reg-
istered with the Commission under this Act; 
‘‘(F) private funds and other investment 
companies not required to be registered with 
the Commission; 
‘‘(G) nonprofit organizations; 
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‘‘(H) pension plans maintained by State or 
local governments (or an agency or instrumen-
tality of either); 
‘‘(I) pension plans maintained by non-
governmental employers; 
‘‘(J) State or municipal government enti-
ties; 
‘‘(K) banking or thrift institutions; 
‘‘(L) sovereign wealth funds; and 
‘‘(M) other investors. 
‘‘(19) The total dollar amount of aggregate fees 
and expenses collected by the fund, the manager of 
the fund, or related parties from target firms with 
respect to the fund, which shall— 
‘‘(A) be categorized by the type of fee; and 
‘‘(B) include a description of the purpose 
of the fees. 
‘‘(20) The total dollar amount of aggregate fees 
and expenses collected by the fund, the manager of 
the fund, or related parties from the limited part-
ners of the fund, which shall— 
‘‘(A) be categorized by the type of fee; and 
‘‘(B) include a description of the purpose 
of the fees. 
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‘‘(21) The total carried interest claimed by the 
fund, the manager of the fund, or related parties 
and the total dollar amount of carried interest dis-
tributed to the limited partners of the fund. 
‘‘(22) A description of, during the year covered 
by the report, any material changes in risk factors 
at the fund level, including— 
‘‘(A) concentration risk; 
‘‘(B) foreign exchange risk; and 
‘‘(C) extra-financial risk, including envi-
ronmental, social, and corporate governance 
risk. 
‘‘(23) Any other information that the Commis-
sion determines is necessary and appropriate for the 
protection of investors. 
‘‘(c) PERIODIC REVIEW.—The Commission shall, 
with respect to the rules issued under subsection (b)— 
‘‘(1) review the rules once every 5 years; and 
‘‘(2) revise the rules as necessary to ensure that 
the disclosures required under the rules reflect con-
temporary (as of the date on which the rules are re-
vised) trends and characteristics with respect to pri-
vate investment markets. 
‘‘(d) PUBLIC AVAILABILITY.—Notwithstanding any 
provision of section 204 of the Investment Advisers Act 
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of 1940 (15 U.S.C. 80b–4), the information disclosed 
under the rules issued under subsection (b) shall be made 
available to the public.’’. 
SEC. 502. FIDUCIARY OBLIGATIONS. 
(a) FIDUCIARY DUTIES UNDER ERISA.—Section 
401(b)(1) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1101(b)(1)) is amended— 
(1) by inserting ‘‘or a private fund (as defined 
in section 3 of the Stop Wall Street Looting Act)’’ 
before ‘‘, the assets’’; and 
(2) by inserting ‘‘or such private fund, as appli-
cable’’ before the period at the end. 
(b) PROHIBITION AGAINST WAIVING FIDUCIARY DU-
TIES.—Section 211(h) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–11(h)) is amended— 
(1) in paragraph (1), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (2), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(3) promulgate rules that prohibit an invest-
ment adviser from requiring any person to which the 
investment adviser provides investment advice, in-
cluding a pension plan (as defined in section 3 of the 
Employee Retirement Income Security Act of 1974 
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(29 U.S.C. 1002)) that is subject to title I of the 
Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1001 et seq.), to, as a condition of the 
investment adviser providing that advice, sign a con-
tract or other agreement in which that person waives 
a fiduciary duty owed by that person to another per-
son.’’. 
(c) APPLICABILITY
OF
BENEFITS.—The general 
partner of a private fund may not provide any term or 
benefit to any limited partner of the fund unless the gen-
eral partner provides that term or benefit to all limited 
partners of the fund. 
SEC. 503. DISCLOSURES RELATING TO THE MARKETING OF 
PRIVATE EQUITY FUNDS. 
Any investment adviser to a private fund shall dis-
close to potential investors with respect to the other pri-
vate funds, as defined in section 202(a) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–2(a)), managed by 
that investment adviser (referred to in this section as 
‘‘managed firms’’) the following information: 
(1) A list of all managed firms with respect to 
the investment adviser, including those managed 
firms that, as of the date on which the disclosure is 
made— 
(A) have active investments; and 
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100 
(B) have liquidated the assets of the firms. 
(2) For each managed firm listed under para-
graph (1), the following information: 
(A) As applicable, the total term of the 
listed firm beginning with the commencement of 
the commitment period with respect to the firm 
and ending on the date on which the firm is 
dissolved, including, with respect to a listed 
firm that, as of the date on which the disclosure 
is made, is actively investing— 
(i) the term specified by any limited 
partnership agreement; and 
(ii) the nature of any provisions that 
would allow for the extension of that term. 
(B) The performance of the listed firm’s 
net of fees, as measured by the public market 
equivalent or a similar measure. 
(C) A list of target firms with respect to 
which the listed firm was a control person and 
the period of that control. 
(D) The number of employees at each tar-
get firm identified under subparagraph (C), as 
of the date on which the listed firm became a 
control person with respect to the target firm, 
and the date on which the listed firm ceased to 
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101 
be a control person with respect to the target 
firm. 
(E) A list of target firms with respect to 
the listed firm with respect to which a case has 
been commenced under title 11, United States 
Code. 
(F) For each target firm with respect to 
the listed firm, and with respect to which the 
listed firm is a control person— 
(i) a list of actions taken by any State 
or local regulatory agency; and 
(ii) any legal or regulatory penalties 
paid, or settlements entered into, by the 
general partners of the target firm or the 
target firm itself. 
(3) The percentage breakdown of the means 
employed by the investment adviser to divest owner-
ship or control of target firms, including— 
(A) the sale of target firms to other pri-
vate funds; 
(B) the sale of target firms to private enti-
ties; 
(C) the sale of target firms to issuers, the 
securities of which are traded on a national se-
curities exchange; 
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102 
(D) the commencement of cases under title 
11, United States Code, with respect to target 
firms; and 
(E) initial public offerings with respect to 
target firms. 
TITLE 
VI—RESTRICTIONS 
ON 
SECURITIZING 
RISKY 
COR-
PORATE DEBT 
SEC. 
601. 
RISK 
RETENTION 
REQUIREMENTS 
FOR 
SECURITIZATION OF CORPORATE DEBT. 
Section 15G of the Securities Exchange Act of 1934 
(15 U.S.C. 78o–11) is amended— 
(1) in subsection (a)(3)— 
(A) in subparagraph (A), by striking ‘‘or’’ 
at the end; 
(B) in subparagraph (B), by striking 
‘‘and’’ at the end and inserting ‘‘or’’; and 
(C) by adding at the end the following: 
‘‘(C) a manager of a collateralized debt ob-
ligation; and’’; 
(2) by redesignating subsection (i) as subsection 
(j); and 
(3) by inserting after subsection (h) the fol-
lowing: 
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‘‘(i) RULES OF CONSTRUCTION.—With respect to a 
securitizer described in subsection (a)(3)(C)— 
‘‘(1) any provision of this section that requires 
that securitizer to retain a portion of the credit risk 
for an asset that such securitizer does not hold, or 
has never held, shall be construed as requiring that 
securitizer to obtain that portion of the credit risk 
for that asset; and 
‘‘(2) any reference in this section to an asset 
transferred by the securitizer shall be construed to 
include any transfer caused by the securitizer.’’. 
TITLE VII—MISCELLANEOUS 
SEC. 701. ANTI-EVASION. 
It shall be unlawful to conduct any activity, including 
by entering into an agreement or contract, engaging in 
a transaction, or structuring an entity, to willfully evade 
or attempt to evade any provision of this Act. 
SEC. 702. SEVERABILITY. 
If any provision of this Act or the application of such 
a provision to any person or circumstance is held to be 
invalid or unconstitutional, the remainder of this Act and 
the application of the provisions of this Act to any person 
or circumstance shall remain and shall not be affected by 
that holding. 
Æ 
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