Chuck Grassley: “I would like to introduce an important piece of legislation aimed at closing a loophole in our securities laws. This…”

“I would like to introduce an important piece of legislation aimed at closing a loophole in our securities laws. This bill, The Hedge Fund Registration Act, is pretty simple. It's only two pages long. All it does is clarify that the Securities and Exchange Commission has the authority to require hedge funds to register, so the government knows who they are and what they're doing. Technically speaking, this bill would amend section 203(b)(3) of the Investment Advisers Act of 1940. It would narrow the current exemption from registration for certain investment advisers. This exemption is used by large, private pooled investment vehicles, commonly referred to as ``hedge funds.'' Hedge funds are operated by advisers who manage billions of dollars for groups of wealthy investors in total secrecy. They should at least have to register with the SEC, like other investment advisors do. Currently, the exemption applies to any investment adviser who had fewer than 15 clients in the preceding year and who does not hold himself out to the public as an investment adviser. The Hedge Fund Registration Act narrows this exemption and closes a loophole in the securities laws these hedge funds use to avoid registering with the SEC and operate in secret.”