Regulatory Oversight and Financial Reform in Senate

Posted - 03/16/2010 | Comments (0)

On Monday, March 15th, 2010 the latest version of the Senate's financial regulatory reform legislation was issued by Senator Christoper Dodd (D-CT). The legislation calls for the creation of a nine-member council, led by the Treasury secretary, to watch for systemic risks. For the most part, though, the regulatory architecture for oversight of the financial system will remain the same.

What will likely be changing, are registration requirements and exemptions for investment advisers and hedge funds. Advisors with over $100 million in assets under management will be required to register with the SEC regardless of their number of clients. For off-shore funds and foreign advisers, there may be a very slim exemption for advisers meeting very stringent and qualifications. To be exempt, the adviser would have to have no place of business in the U.S., fewer than 15 clients, less than $25 million AUM in U.S. client assets, and could not hold themselves out to U.S. investors as investment advisers. Any advisers wishing to do business in the U.S. as investment advisers, would thus be required to register. For advisers with less than $100 million in assets, they will still be required to register on the state level.

In addition to new registration requirements, hedge funds would have specific record keeping requirements and would need to provide greater transparency by reporting on areas such as level of assets, counterparty credit risk exposure, trading and investment positions, and types of assets held.

The revised version of the financial reform bill contained many concessions to Senate Republicans and is expected that additional Republican amendments regarding the Consumer Financial Protection Bureau will be introduced. Democrats will need the support of at least one Republican and all Democrats for the bill to pass; however, if the legislation passes in the Senate, the next step is to reconcile the Senate Legislation with the House's version of financial reform that passed in late 2009.

For a summary of the Restoring American Financial Stability Act - Click here
For the full text of the Restoring American Financial Stability Act - Click here

To learn more about how ACI can work with your firm to achieve accurate books & records and keep up with regulatory changes contact info@acisecure.com and include in the subjectline "Hedge Fund Regulatory Consult".

Posted - 03/16/2010 | Comments (0)