US House Panel Approves Hedge Fund Adviser Registration At SEC

The committee also agreed on Tuesday to broaden the bill so it would cover overseas funds so that they cannot escape oversight by the SEC.

After last-minute negotiations, the committee approved an amendment setting the threshold for registration relatively high--at $150 million in managed assets. The administration has recommended a much lower threshold, at $30 million.

The amendment also requires exempted advisers to maintain records and provide the SEC with annual reports or other data the commission deems necessary.

The committee approved an amendment would establish a study to analyze the costs of the new reporting requirements.

Capital Markets Subcommittee Chairman Paul Kanjorski, D-Pa., said the reporting costs are expected to be in the range of $5,000 to $15,000 for most hedge funds. Complicated hedge funds may run up as high as several hundred thousand dollars, he said.

An issue that may still prove to be a contentious point is the fact the bill carves out a registration exemption for advisers of venture-capital funds. Kanjorski, the drafter of the bill, said venture-capital advisers would still need to file certain forms with the SEC.

SEC Chairman Mary Schapiro, in a speech in New York Tuesday, warned against granting broad carve-outs to portions of the private fund industry. A similar hedge fund registration proposal by the Obama administration doesn't call for exempting venture-capital funds.

The SEC currently has limited authority over hedge fund advisers. In many cases, advisers have the ability to opt out of registration based upon various exemptions in securities laws.

The SEC attempted to regulate hedge funds in 2004 after approving a rule requiring hedge-fund advisers to register with the SEC, but a U.S. appeals court later overturned it.

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com

-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; sarah.lynch@ dowjones.com

  (END) Dow Jones Newswires
  10-27-091706ET
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