WASHINGTON (Reuters) - U.S. hedge funds and private equity firms told Congress on Tuesday that all advisers to private pools of capital should be subjected to the same level of federal scrutiny, including those managing venture capital funds.
A draft U.S. bill would require advisers of hedge funds and private equity funds to register with the Securities and Exchange Commission, thus forcing more disclosures to regulators and investors.
However, the draft House of Representatives bill exempts venture capital funds from mandatory registration with the regulator.
"We have and continue to support requiring registration of managers of private equity, venture capital and hedge funds," said the Private Equity Council lobby group, which represents some of the largest names in the industry such as the Carlyle Group and the Blackstone Group.
Global policymakers have been pushing for oversight of the loosely regulated private pools of capital out of fear that the funds could pose a risk to the greater financial system.
The House Financial Services Committee held a hearing on Tuesday to examine laws to increase investor protection, regulate private pools of capital and insurance companies.
Hedge fund lobby, the Managed Funds Association, also said it supported mandatory registration of investment advisers to all private pools of capital.
Venture capital funds were exempt from the draft because they approached the congressional committee with an "amendment idea which would get us the information we are interested in having for systemic regulation," Representative Paul Kanjorski told reporters after the day-long hearing.
"We are going to accomplish what we wanted to accomplish without calling it registration or making it registration," said Kanjorski, who issued the draft bill and is the chairman of the House financial services subcommittee on capital markets.
"We are trying to accommodate as many of the industries that we are causing some difficulty to as best we can," he said.
The venture capital industry told Congress that registration requirements would place an "undue burden on the venture industry."
"The legislative draft recognizes the important difference between entrepreneurial risk in which venture capitalists engage and financial systemic risk in which we do not," said the National Venture Capital Association.
Investment advisers registered with the SEC are required to provide clients with information about their business, fees, risks customers can expect and conflicts of interest.
The Obama administration wants all advisers to larger hedge funds, private equity funds and venture capital funds to register with the SEC. The administration also has proposed the funds disclose their counterparties and information needed to assess whether a fund is so large or highly leveraged that it poses a threat to financial stability.
(Reporting by Rachelle Younglai; Editing Bernard Orr and Carol Bishopric)
