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CPIC Outlines New Statute Tailored to Regulate Private Investment Companies

In July 15 testimony before the Senate Banking Subcommittee on Securities, Insurance, and Investment, the Coalition of Private Investment Companies proposed the drafting of a special “Private Investment Company” statute, specifically tailored for SEC regulation of private investment funds. This legislation would require:

Registration of private funds with the SEC;

That each such fund and its investment manager be subject to SEC inspection and enforcement authority, just as mutual funds and registered investment advisers are;

Custody and audit protections to prevent theft, Ponzi schemes, and fraud;

Robust disclosures to investors, counterparties, and lenders;

Private funds to provide basic census data in an on-line publicly available form;

The implementation of anti-money laundering programs, just as broker-dealers, banks, and open-end investment companies must do; and,

The adoption of risk-management plans for larger funds to identify and control material risks and plans to address orderly wind-downs.

CPIC believes that these statutory requirements would benefit investors by putting into place a comprehensive regulatory framework that enhances the ability of regulators to monitor and address systemic risks while providing clearer authority to prevent fraud and other illegal actions. Our approach strives for the highest standards of prevention without eliminating the beneficial effects of responsible innovation. and private investment companies.

See complete PDF testimony here

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