The Association for Corporate Growth (ACG) applauds Congressional hearing held on May 24 to consider exempting middle-market private equity funds from the registration requirements under the SEC’s Investment Advisers Act of 1940 imposed by Dodd-Frank. The hearing, held before the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises considered HR 1105, the Small Business Capital Access and Job Preservation Act of 2013, would amend the Investment Advisors Act of 1940 to provide an exemption from registration for certain private equity fund advisers.

“We thank Subcommittee Chairman Garrett of New Jersey and Ranking Member Carney of Delaware for holding today’s hearing and welcome the committee’s consideration of this important legislation,” said Gary A. LaBranche, FASAE, CAE, ACG president and CEO. “ACG and its members have long been supportive of financial regulatory enhancements. However, middle-market private equity funds have not been shown to add to the systemic risk of the global financial system. It is important that the application of Dodd-Frank uphold the original spirit and intent of the legislation which is to safeguard our financial system, without constraining capital and the middle-market’s ability to contribute to economic growth and job creation.”

The bipartisan legislation was introduced by Congressman Robert Hurt (R-VA) and co-sponsored by Congressmen Himes (D-CT), Garrett (R-NJ), and Cooper (D-TN). In the 112th Congress, a similar bill had been approved favorably by a voice vote in the full House Financial Services Committee.

“We feel that the registration requirement for middle market private equity fund managers was a misinformed step in positive legislative efforts to safeguard our country’s financial systems. In passing HR 1105, Congress would exempt from registration middle-market private equity advisors that are structured and operate in a way that is almost identical to venture capital funds, which under Dodd-Frank are already exempted from having to register under the Investment Advisers Act,” said LaBranche.