H.R. 4129: Tailoring for Main Street’s Investors Act

The proposed legislation, known as the Tailoring for Main Street’s Investors Act, aims to amend the Investment Advisers Act of 1940, specifically focusing on the registration requirements for certain investment advisers of private funds. Here’s a breakdown of what the bill would do:

Exemption from Registration

The bill introduces a new exemption from the registration requirements for investment advisers who manage private funds, under specific conditions:

• The investment adviser must only manage private funds and have less than $5 billion in assets under management in the U.S.
• All investors in the private funds must be:
• Qualified purchasers, as defined by the Investment Company Act of 1940.
• Accredited investors, defined by the Securities and Exchange Commission (SEC), or
• Investment professionals licensed by a national securities association.
• The private funds must not offer investors any redemption or similar liquidity rights, except under extraordinary circumstances.

Reporting Requirements

Investment advisers that qualify for the exemption will need to maintain certain records and submit reports to the SEC every two years. However, these reporting requirements will be designed to be no more burdensome than existing regulations for similar entities.

Reporting for Smaller Advisers

The bill also covers smaller investment advisers with less than $1 billion in assets:

• These advisers will only need to file Form ADV with the SEC once every two years, rather than more frequently, as is currently required.
• The SEC is required to develop a simplified version of Form ADV for these smaller entities to facilitate compliance.

Overall, the Tailoring for Main Street’s Investors Act would streamline the regulatory burden for certain private fund advisers, particularly those that are smaller in size and manage wealth from qualified investors.

Relevant Companies

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