SEC Commissioner questions PE registration

Certain private equity funds should be granted partial relief from harmful registration requirements, argued SEC Commissioner Daniel Gallagher in a recent speech.

Private funds entering the remit of the US Securities & Exchange Commission later this month should not be regulated in a “one size fits all” approach, argued one of the agency’s five commissioners.

Speaking before the Investment Adviser Association in Virginia last week, SEC Commissioner Daniel Gallagher said the agency should exercise its “exemptive authority to mitigate the unintended consequences of [Dodd-Frank] rulemaking”. Gallagher argued private funds made available only to sophisticated investors need not the same protections as funds marketed to retail investors. 

Gallagher, appointed by President Barack Obama for a five year term in 2011, stressed his comments were his own, and do not necessarily represent the positions of the Commission or his fellow Commissioners.


As part of the Dodd-Frank Act, passed in July 2010, private funds managing more than $150 million in assets will need to register with the SEC as investment advisors by 30 March.

However Gallagher said the financial reform bill never revoked the agency’s ability to conditionally or unconditionally exempt certain types of persons or funds from registration, leaving the SEC free “to temper the effects” of Dodd-Frank on certain private funds. 

He continued: “I worry that, in the aftermath of the financial crisis, the Commission may be moving away from its long-established sensitivity to these distinctions. To regulate as if all investors are alike may lead the Commission to impose massive costs on the system without a purpose that is consistent with the Commission’s mission and its decades of experience.”