A proposal to scrap private fund firms’ obligation to register with the Securities and Exchange Commission has been slammed by the Institutional Limited Partners Association on the grounds it would negatively impact investors.
The proposal, included in a draft of the Financial Choice Act, would remove regulatory oversight that had ensured transparency and compliance with existing reporting procedures, ILPA said in a letter to the House Financial Services Committee.
“There are proven limits to what even the most powerful investor can achieve through negotiation, particularly without strong oversight to ensure the rules of the market are followed and the contractual obligations are being met,” Peter Freire, chief executive of ILPA, wrote.
The ability to govern these relationships was “markedly improved” by the requirement that private equity fund advisors register with the SEC, he added.
The Financial Choice Act, penned by Texas Republican Jeb Hensarling, was presented to the House Financial Services Committee on Wednesday.
It is designed to reduce, or rollback entirely, many aspects of the Dodd-Frank Act.
“True consumer protection comes from competitive, transparent and innovative markets that are vigorously policed for fraud and deception. This is precisely what the Financial CHOICE Act will do,” said Hensarling in a statement.
ILPA has led its own initiatives to improve investor reporting, introducing an investor reporting template last year.