Grassley first introduced his legislation in 2007 (See Grassley Presses for Hedge Fund Registration ). The legislation would have narrowed the exemption that is currently used by large, private pooled investment vehicles to avoid registering with the SEC.
It would have authorized the SEC to require investment advisers to register unless the adviser:
- had $50,000,000 or less in assets under management,
- had fewer than fifteen clients,
- did not hold itself out to the public as an investment adviser, and
- managed the assets of fewer than fifteen investors, regardless of whether the investors participate directly or through a pooled investment vehicle, such as a hedge fund.
Grassley said the he will file the new bill when the new Congress begins in 2009 and it will be modeled after his prior proposal, according to a Finance Committee news release.
Grassley started his initiative after a 2006 decision by the U.S. Circuit Court of Appeals for the D.C. Circuit, which overturned a regulation imposed by the SEC requiring hedge funds to register (See Court Throws out Hedge Fund Registration Rule ). The federal court said the Commission was going beyond its statutory authority.
“It’s up to Congress to take action and clear the way for the Securities and Exchange Commission to achieve transparency with hedge funds,” Grassley said in the news release.