Private equity executives and the trade groups that represent them in Washington are betting a Republican-controlled Congress will translate to a more favorable regulatory environment for the industry in 2015. Many are quick to add, however, that any change is likely to be incremental if it is to make it past President Barack Obama’s desk.
Specifically, a number of industry professionals say they hope to see modifications to the Dodd-Frank Wall Street Reform and Consumer Protection Act that would exempt more private equity firms from registering as investment advisers with the Securities and Exchange Commission. About 66% of the 203 firms surveyed by the Association for Corporate Growth in 2014 cited investment adviser compliance as one of their key areas of concerns. “The plumbing [of Dodd-Frank] might be adjusted to better suit the attributes of private equity,” said Howard Berkower, a partner at law firm McCarter & English LLP.
Two bills that proposed additional registration exemptions for private equity passed the U.S. House of Representatives in the past two years, but failed to make it through the Senate. Several industry professionals suggested that a potential compromise could raise the asset threshold for exemption from SEC registration above the current $150 million level so that it would exempt more small and midmarket firms.
“Those are the funds that when subject to all of this record keeping and expense makes it difficult for them to operate,” Mr. Berkower said.