SEC may charge for examinations

The US Securities and Exchange Commission (SEC) may be entitled to charge private equity firms examination fees if legislation introduced by California Democrat Maxine Waters is passed.

The house bill states that, in lieu of a self-regulatory organisation (SRO), the SEC “shall collect an annual fee from investment advisers that are subject to inspection or examination by the Commission under this title to defray the cost of such inspections and examinations”.
  
There is no exception for private equity firms or other types of SEC-registered investment advisors. Private equity firms were recently required to register with the SEC as part of ongoing Dodd-Frank financial reforms.

Despite being backed by two more congressmen (House Representatives Barney Frank and Michael Capuano) the bill faces an uphill battle to become law.

The bill comes not long after a separate bill that would shift investment advisor oversight from the SEC to a SRO. The SRO that was put forward was broker watchdog the Financial Industry Regulatory Authority (FINRA) who would then have oversight for hedge funds, private equity or venture capital funds.

This was met with displeasure from the industry with one US-based GP telling PE Manager the level of intrusiveness would go up if it was FINRA, and not the SEC, that had oversight.

“The schedule and cycle of visits would be more frequent and that there is the fear that they would bring over some of the regulations like gift limitations and that doesn’t sit well with private equity,” he added.