Congress 114 - HR 5424 - Investment Advisers Modernization Act of 2016

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Administrative law and regulatory procedures Business records Finance and Financial Sector Financial services and investments Fraud offenses and financial crimes Marketing and advertising Securities Securities and Exchange Commission (SEC)

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Summary

Investment Advisers Modernization Act of 2016

This bill directs the Securities and Exchange Commission (SEC) to amend specified regulations for investment advisers as they apply to private equity firms and private investment funds.

(Sec. 2) The bill revises the disclaimer that, in the case of an investment adviser that is a partnership, an assignment shall not be deemed to result from the death, withdrawal, sale or transfer of minority interests to apply the disclaimer also to minority members, shareholders, for other equity owners of the investment adviser. Qualified clients of an investment adviser may consent to an assignment of the investment adviser contract at the time they enter into an advisory contract.

The Investment Advisers Act of 1940 is amended to repeal the requirement that advisers organized as partnerships notify the other party to an investment adviser contract every time there is a change in the composition of the partnership.

The SEC shall waive the application of specified antifraud prohibitions to advisers who advertise exclusively to:

qualified clients, determined as of the time of the publication, circulation, or distribution of the advertisement rather than immediately before or after entering into the investment advisory contract;
knowledgeable employees of any private fund to which the investment adviser acts as an investment adviser;
qualified purchasers; or
accredited investors (determined as if the investment adviser were the securities issuer and the time of the publication, circulation, or distribution of the advertisement were the sale of such securities).

(Sec. 3) The SEC must amend a certain regulation regarding Form PF which registered investment advisers with at least $150 million in private funds assets under management must file with the SEC to report information about the private funds that they manage. This amendment shall state that an investment adviser to a private fund is not required to report any information beyond that which is required by sections 1a and 1b of Form PF unless it is a large hedge fund adviser or a large liquidity fund adviser.

The SEC shall also amend the regulation requiring that client funds and securities of which an investment adviser has custody are verified by actual examination periodically by an independent public accountant.

The SEC shall amend the proxy voting regulation to waive its application to any voting authority exercised by an investment adviser regarding client securities that are not public securities.

(Sec. 4) On the other hand, the SEC may not:

amend a specified regulation to extend its requirements and prohibitions concerning investment company sales literature to offerings of securities issued by private funds, or
adopt substantially similar rules applicable to such offerings.

(Sec. 5) This bill shall not apply to advisory services supplied to an investment company registered under the Investment Company Act of 1940.

(Sec. 6) Any regulation referred to in this bill includes any successor regulation.

Actions

Sep 12, 2016

Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Sep 9, 2016

Motion to reconsider laid on the table Agreed to without objection.
Sep 9, 2016

On passage Passed by the Yeas and Nays: 261 - 145 (Roll no. 495).
Sep 9, 2016

Passed/agreed to in House: On passage Passed by the Yeas and Nays: 261 - 145 (Roll no. 495).
Sep 9, 2016

On motion to recommit with instructions Failed by the Yeas and Nays: 176 - 232 (Roll no. 494).
Sep 9, 2016

Considered as unfinished business. (consideration: CR H5244-5246)
Sep 9, 2016

POSTPONED PROCEEDINGS - At the conclusion of debate on the Torres motion to recommit, the Chair put the question on adoption of the motion and by voice vote, announced the noes had prevailed. Mrs. Torres demanded the yeas and nays and the Chair postponed further proceedings on the motion to recommit until later in the legislative day.
Sep 9, 2016

The previous question on the motion to recommit with instructions was ordered without objection. (consideration: CR H5244)
Sep 9, 2016

DEBATE - The House proceeded with 10 minutes of debate on the Torres motion to recommit with instructions pending a reservation of a point of order. The instructions contained in the motion seek to require the bill to be reported back to the House with an amendment to add at the end of the bill a section pertaining to Report on Emergency Vehicle Response Times of Companies Owned by Private Funds. Subsequently, the reservation was removed.
Sep 9, 2016

Mrs. Torres moved to recommit with instructions to the Committee on Financial Services. (consideration: CR H5238-5239, H5244-5245; text: CR H5238-5239)
Sep 9, 2016

DEBATE - Pursuant to the provisions of H.Res. 844, the House proceeded with 10 minutes of debate on the Foster amendment.
Sep 9, 2016

DEBATE - The House proceeded with one hour of debate on H.R. 5424.
Sep 9, 2016

Rule provides for consideration of H.R. 2357 and H.R. 5424.
Sep 9, 2016

Considered under the provisions of rule H. Res. 844. (consideration: CR H5230-5239; text of measure as reported in House: CR H5230-5231)
Sep 9, 2016

ORDER OF PROCEDURE - Mr. Hurt asked unanimous consent that the question of adopting a motion to recommit on H.R. 5424 may be subject to postponement as though under clause 8 of rule 20.
Sep 8, 2016

Rule H. Res. 844 passed House.
Sep 6, 2016

Rules Committee Resolution H. Res. 844 Reported to House. Rule provides for consideration of H.R. 2357 and H.R. 5424.
Jul 21, 2016

Placed on the Union Calendar, Calendar No. 540.
Jul 21, 2016

Reported (Amended) by the Committee on Financial Services. H. Rept. 114-698.
Jun 16, 2016

Ordered to be Reported (Amended) by the Yeas and Nays: 47 - 12.
Jun 16, 2016

Committee Consideration and Mark-up Session Held.
Jun 15, 2016

Committee Consideration and Mark-up Session Held.
Jun 9, 2016

Referred to the House Committee on Financial Services.
Jun 9, 2016

Introduced in House
May 17, 2016

Hearings Held by the Subcommittee on Capital Markets and Government Sponsored Enterprises Prior to Introduction and Referral.

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