On Friday, Congressman Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, released a discussion draft of a private fund adviser registration bill.

Kanjorski’s bill, titled the Private Fund Investment Advisers Registration Act, has the same title as and is substantially similar to the bill proposed by the Treasury Department in July, except that Kanjorski’s bill includes an exemption from registration for venture capital fund advisers.

Notably, Kanjorski’s bill does not define the term “venture capital fund adviser”, but rather leaves it to the SEC to come up with a definition of the term “venture capital fund”. Specifically, Kanjorski’s bill states that

“[t]he 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.”

Although venture capital fund advisers would be exempt from having to register with the SEC, such advisers would be subject to certain reporting requirements. Again, the bill leaves it to the SEC to determine the specifics regarding such reporting requirements, stating that

“[t]he Commission shall require such [venture capital fund] 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.”

In addition to adding an exemption for venture capital fund advisers, Kanjorski’s bill also broadens the SEC’s authority to collect information from registered investment advisers by adding a “catch-all” provision which states that

“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 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.”

In talking about the bill, Rep. Kanjorski said:

“[W]e need to ensure that everyone who swims in our capital markets has an annual pool pass.  The Private Fund Investment Advisers Registration Act will force many more financial providers to register with the SEC. Many financial firms skirt government oversight and get away like bandits, but now the advisers to hedge funds, private equity firms, and other private pools of capital would become subject to more scrutiny by the SEC.”

A copy of Kanjorski’s bill can also be viewed here.