On June 16, 2016, the House Financial Services Committee approved the Investment Advisers Modernization Act of 2016 (H.R. 5424) as part of a package of several economic growth bills. The bill passed with a vote of 47-12 and is sponsored by Representative Robert Hurt (R-VA).

Among other things the bill would require the SEC to revise:

• Rule 204-2 under the Investment Advisers Act to provide that an investment adviser is not required to maintain due diligence materials used for a prospective investment if it is subject to a confidentiality agreement or internal written communications sent and received only by supervised persons of the investment adviser.
• Rule 206(4)-1, which governs advertisements by investment advisers, to provide that the rule does not apply to advertisements published solely to qualified clients, knowledgeable employees of private funds, qualified purchasers and accredited investors.
• Rule 204-3(c) to provide that delivery of a brochure to certain clients is not required if each investor in the client received, prior to the time of purchase, a private placement memorandum containing substantially the same information required by Part 2A or 2B of Form ADV.
• Rule 204(b)-1 to provide than an investment adviser to a private fund (other than certain large hedge fund and liquidity fund advisers) is not required to report any information beyond that required by sections 1a and 1b of Form PF.
• Require the SEC to revise Rule 204A-1 to provide that access persons of investment advisers who solely advise one or more clients that hold non-public securities need only submit transaction reports at a frequency specified in the investment adviser’s code of ethics, but not less frequently than annually.