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How Financial Reforms Will Impact Private Equity Hedge Funds

By Harvard Law School Program on Corporate Governance

On May 20, 2010, the U.S. Senate passed a comprehensive set of financial regulatory reforms that, if enacted, will represent the most sweeping set of changes to the U.S. financial regulatory system since the Great Depression. The reforms, which are set forth in a bill of more than 1,500 pages called the Restoring American Financial Stability Act of 2010 (S. 3217, or the ?Senate Bill?) and which come after nearly a year of Congressional hearings and months of stop-and-start legislative negotiations, contain a number of provisions relevant to private funds and their advisers.

In its treatment of private funds, the Senate Bill tracks many of the themes contained in the Wall Street Reform and Consumer Protection Act (H.R. 4173, or the ?House Bill?) that was passed by the U.S. House of Representatives on December 11, 2009. However, there are significant differences concerning, among other things, the registration of private fund advisers and restrictions on the relationship and activities of banking organizations with private equity and hedge funds. The bills also mandate specific executive compensation and corporate governance practices at U.S. public companies generally and, accordingly, would affect a subset of the portfolio companies of private equity, venture capital and other private funds.

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Full post as published by The Harvard Law School Corporate Governance Blog on June 08, 2010 (boomark / email).