The Institutional Limited Partners Association reiterated its concerns that the Financial Choice Act will negatively affect investors after the House of Representatives passed the bill on Thursday.
ILPA chief executive Peter Freire said the legislation “eliminates a regulatory structure that has been extremely beneficial to fostering transparency, disclosure and sound governance within the private equity industry.”
Freire said the organization is urging the US Senate to consider the consequences of moving the Choice Act as there are currently harmful provisions included.
It follows a letter the association sent to the House of Representatives Financial Services Committee in which it said that sections 858 and 859 of the bill, which will remove the requirement private fund firms register with the SEC, will hurt limited partners and their beneficiaries by removing regulatory oversight.
In a March survey of its membership, ILPA confirmed that LPs remain strongly in favor of SEC registration and oversight of the private equity industry, with 92 percent of respondents indicating that such regulation should continue.
The LPs also indicated in the survey that the SEC provides additional assurances and protections which would otherwise be difficult or impossible to obtain.
The Financial Choice Act, penned by Republican congressman Jeb Hensarling, also includes a proposal to eliminate the Volcker rule which states investment banks can only hold 3 percent of Tier 1 capital in private investments.