Client Alert
| April 8, 2009
Recent Congressional Testimony Signals Increased Likelihood That More Regulation is Coming for Private Investment Funds
On March 26, 2009, Chairman Mary L. Schapiro of the Securities and Exchange Commission (“SEC” or the “Commission”) testified before the Senate’s Committee on Banking, Housing and Urban Affairs regarding the SEC’s intention to request more stringent regulation of financial institutions. At the same time, U.S. Treasury Secretary Timothy F. Geithner testified before the House of Representatives’ Committee on Financial Services, proposing vast changes to the current regulatory regime. While neither Ms. Shapiro nor Mr. Geithner offered detailed plans, both indicated that they supported substantial additional regulation for all financial institutions (including private investment funds) that pose a “systemic risk” to the entire financial system. Mr. Geithner indicated support for requiring private investment funds and their investment advisers to register with the SEC once such entities exceeded a specific size threshold, whereas Ms. Shapiro indicated that the SEC is considering requesting legislation that would require all investment advisers and all private investment funds (perhaps regardless of size) to register with the SEC.
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