The Securities and Exchange Commission on Friday offered lawmakers Exhibit A for strengthening a bill that would require certain investment advisers to register with the SEC. As Complinet has reported, the Financial Services Committee overwhelmingly voted Tuesday to send the bill, HR 3818, to the full House. The committee-passed version of the Private Fund Investment Advisers Registration Act of 2009 would require SEC registration by advisers to hedge and private equity funds and other private pools of capital, but would exempt advisers to venture capital firms.
The rationale for exempting VC funds is that they provide seed money for start-ups and are not seen as participating in the public securities market. But SEC allegations that the former chief financial officers of a PE firm and of a VC firm took part in an insider trading ring that reaped over $8m in illicit profits may challenge this assumption.
The complaint, which was filed in San Francisco federal court, alleged that Chen
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