US Proposal to Regulate Private Equity and VC, Not Just Hedge Funds
Senator Jack Reed (D) is proposing an amendment targeting virtually all private investment pools to a proposed Wall Street reform bill. While the current senate bill would require hedge funds with assets under management in excess of $100 million to register and report to the SEC, it doesn't cover Private Equity and Venture Capital, nor funds with less than $100 million AUM. Senator Reed's amendment would target all pooled investment vehicles, including PE and VC funds, with lighter restrictions on smaller funds on $100 million.
According to Reed, "The financial crisis is a stark reminder that transparency and disclosure are essential in today’s marketplace. Improving oversight of hedge funds and other private funds is vital to their sustainability and to our economy’s stability."
It remains to be seen how effective US hedge fund regulation will be at preventing systemic risks. Insiders widely believe $100 million hedge funds may pose a risk to their investors and some counter parties, but do not threaten the entire system like some multi-billion dollar funds.