Legislation Giving Private Equity Fund Managers Exemption from Registration Clears Key Committee

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A bill called the Small Business Capital Access and Job Preservation Act recently cleared the Committee on Financial Services of the U.S. House of Representatives. The bill's intent is to exempt certain private equity funds from Investment Adviser registration. The bill would create a new category of exemption from IA registration for private equity funds. One condition to qualifying for this new exemption is that the fund must not borrow in excess of twice its invested capital commitments. This condition was added to attempt to assuage opponents who thought that highly leverage funds should be closely regulated. The SEC would have the final say on defining exactly what a private equity fund is, just as it did with defining the term "venture capital fund."

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