United States: Private Fund Update - July 29, 2013

Last Updated: August 2 2013
Article by Scott E. Gluck

Quick note: Last week Venable and the Association for Corporate Growth (ACG) hosted a free webinar on current legislative and regulatory issues relevant to private funds with Congressman David Schweikert, a key author of the JOBS Act. The webinar and slide deck are located here.

Both Chambers consider THUD appropriations this week – the last week Congress is in session before embarking on a five-week recess. There is a small chance the Senate and/or House will work through the recess, but don't count on it – they'll likely wrap up as much as they can before heading out of town through Labor Day.

Last week:

  • House Small Business Committee held a hearing on the SBIC program that was highly supportive of the program.
  • House Agriculture Committee held two hearings on CFTC reauthorization, which is relevant to users of swaps (particularly end-users).
  • Senate Appropriations Committee approved its FY 2014 Financial Services appropriations bill at $315 million for the CFTC and $1.674 billion for the SEC.
  • The SEC leveled criminal charges against SAC Capital, a (formerly) $15 billion hedge fund.
  • Think tank Third Way released two reports – one on money market mutual funds and another on high-frequency trading (links below).
  • The BUILD Coalition released a new video highlighting the importance of interest deductibility in economic development. The BUILD Coalition opposes the elimination of the deductibility of interest on corporate debt.

This week the Senate Banking Committee holds a hearing with SEC Chairwoman Mary Jo White and CFTC Chairman Gary Gensler on mitigating systemic financial risk through Wall Street reforms.

THE PRESIDENT

The President returned his focus to the economy, delivering a speech in Jacksonville, Florida that focused on restoring the economy for middle-class families, followed by a weekly address also focused on building a "better bargain" for the middle class. The President also came out strongly in support of the Senate's THUD bill, and issued a veto threat for the House THUD bill, which appropriates approximately $10 billion less for FY 2014 than the Senate bill.

THE 113TH CONGRESS

The Senate

The Senate continues consideration of S. 1243, the FY 2014 THUD appropriations bill.

Senate Banking Committee

This week the SBC holds one hearing and one markup:

Mitigating Systemic Risk Through Wall Street Reforms – On Tuesday, the Committee holds a hearing on "Mitigating Systemic Risk in Financial Markets Through Wall Street Reforms." Witnesses are:

  • Mary Jo White, Chairwoman, SEC
  • Gary Gensler, Chairman, CFTC

Markup on FHA Solvency Act – On Wednesday, the full committee meets to consider S. 1376, the FHA Solvency Act of 2013. The text of the bill is not yet available, but it is sponsored by Chairman Johnson and Ranking Member Crapo. Last week the Committee held a hearing on this issue with Assistant HUD Secretary Carol Galante (see below).

Last week the committee held three hearings.

Hearing on Financial Holding Companies – The Financial Institutions and Consumer Protection subcommittee holds a hearing on "Examining Financial Holding Companies: Should Banks Control Power Plants, Warehouses and Oil Refineries?" Witnesses were:

Hearing on a Housing Finance System – The Securities, Insurance and Investment subcommittee held a hearing entitled "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions."

Hearing on FHA Solvency – The Committee held a hearing on "The FHA Solvency Act of 2013." The sole witness was Carol Galante, Assistant Secretary of HUD. Assistant Secretary Galante's written testimony is here.

Senate Appropriations Committee

Subcommittee and Full Committee Financial Services Markups – The SAC passed its FY 2014 financial services bill, funding the SEC at $1.6 billion and the CFTC at $315 million.

House of Representatives

Small Business Committee

The HSBC held two hearings last week, including an important one on the SBIC program:

Hearing on the SBIC Program – The Oversight and Regulations subcommittee held a hearing entitled "Examining the Small Business Investment Company Program." Witnesses were:

The Hearing Memo is here, and a video is here.

Hearing on Reducing Regulatory Burdens – The Committee also held a hearing entitled "Reducing Red Tape: The New OIRA Administrator's Perspective." The sole witness was Howard Shelanski, Administrator, Office of Information and Regulatory Affairs for OMB. Administrator Shelanski's written testimony is here. The purpose of the hearing was to examine the results of agencies' efforts to review the existing regulations as required by Executive Orders 13,563 and 13,610.

Financial Services Committee

Last week HFS held a two-day markup on GSE Reform:

Markup of GSE Reform Bill – The full Committee spent two days marking up the Protecting American Taxpayers and Homeowners (PATH) Act which, among other things, winds down Fannie Mae and Freddie Mac. The Committee Memorandum is here. Videos of the hearing are here (Tuesday) and here (Wednesday). The Committee approved the final bill by a 30-27 vote along party lines, with Congressman Gary Miller (R-CA) and Congressman Mike Fitzpatrick (R-PA) voting against the measure.

House Agriculture Committee

Hearings on CFTC – The committee held two hearings last week on reauthorization of the CFTC: The Future of the CFTC: Commission Perspectives and The Future of the CFTC: End-User Perspectives. Commissioners Scott O'Malia (testimony) and Mark Wetjen (testimony) testified at the first hearing and a bevy of end-users testified at the second hearing. A video of the hearing with the two Commissioners is here and a video of the end-user hearing is here.

SECURITIES AND EXCHANGE COMMISSION

Charges Against S.A.C. Capital

The U.S. Attorney for the Southern District of New York filed a criminal indictment against S.A.C. Capital, the large hedge fund formed by Stephen Cohen. The 41-page criminal indictment alleges that S.A.C. operated as a criminal enterprise engaged in a variety of illegal activities, including trading on inside information, securities fraud and wire fraud. The indictment does not name Stephen Cohen as a defendant. The U.S. Attorney seeks the forfeiture of assets held by S.A.C. and its advisors and affiliates. At the same time, the SEC charged a former portfolio manager at S.A.C. Capital, Richard Lee, with insider trading.

Investor Advisory Committee Meeting

The SEC's Investor Advisory Committee held a meeting to discuss data tagging and universal proxy issues. A copy of the agenda is here. The Committee's recommendations regarding data tagging, to promote the cost-effective retrieval of information by investors, is here and the Committee's recommendations regarding universal proxy ballots is here. A video of the hearing is here.

SEC Announces Compliance Outreach Seminars

The SEC announced it will be holding a series of seminars in cities around the country as part of its Compliance Outreach Program for investment adviser and investment company senior officers, including chief compliance officers (CCOs). The seminars highlight areas of focus for compliance professionals and allow SEC staff to identify common issues found in examinations or investigations and discuss industry practices, including how compliance professionals have addressed such matters. The upcoming seminars are:

  • Chicago – August 28
  • New York – September 13
  • Atlanta – September 25
  • San Francisco – November 6

For more information and to register for the seminars, click here.

Final Rules and Proposed Rule Published in Federal Register

The SEC's final rule eliminating the prohibition against general solicitations and the final "bad actor" rule were published in the Federal Register on Wednesday, July 24, meaning that both rules go into effect on September 23, 2013. The proposed rule imposing new restrictions on general solicitations was also published in the Federal Register on July 24, meaning comments are due on September 23.

COMMODITY FUTURES TRADING COMMISSION

Agricultural Advisory Committee Meeting

On Thursday, July 25 the CFTC's Agricultural Advisory Committee met to discuss a variety of issues, including Customer Protection, Ethanol and Voice Recordings. Chairman Gensler and Commissioners Chilton, O'Malia and Wetjen participated. The agenda for the meeting is here.

Congressional Testimony

Commissioners Mark Wetjen and Scott O'Malia testified before the General Farm Commodities Subcommittee of the House Agriculture Subcommittee on Thursday. Commissioner Wetjen's written testimony is here and Commissioner O'Malia's written testimony is here.

PRIVATE EQUITY GROWTH CAPITAL COUNCIL (PEGCC)

Private Equity at Work - Video Case Study

The PEGCC released its latest Private Equity at Work case study – a video highlighting the success of Entrust, a leading provider of identity-based security solutions which received an investment from private equity fund Thoma Bravo.

THIRD WAY

Reports on Money Market Mutual Funds and High Frequency Trading

Last week the think tank Third Way released two reports, one on Monday Market Mutual Funds, and another on High Frequency Trading. Both reports explain in simple, easy-to-understand terms, what these two frequently misunderstood area of finance are, whether the public benefits from them and potential regulatory issues associated with them, and are worth reading.

MISCELLANEOUS

GAO Report on Criteria for Qualifying as an Accredited Investor

The GAO issued a report stating that the SEC should consider alternative criteria for individuals to qualify as an accredited investor. GAO analysis of federal data on household net worth showed that adjusting the $1 million minimum threshold to approximately $2.3 million, to account for inflation, would decrease the number of households qualifying as accredited from approximately 8.5 million to 3.7 million. Private funds interviewed for the study said they would be resistant to increased thresholds for AI status, as that would decrease the number of eligible investors.

Chamber of Commerce's Q2 Small Business Survey

The U.S. Chamber of Commerce released its latest quarterly small business survey, which shows that the health care law has emerged as the top concern for small businesses. Small business owners overwhelmingly voiced support for polices that would remove regulatory barriers and encourage growth, with 88% supporting action to address entitlement spending, and 81% responding that the immigration system is broken and needs to be reformed

BUILD Coalition – New Video

The BUILD Coalition released its latest video, entitled "Interest Deductibility: A Building Block for Growth". The video highlights the importance of interest deductibility on corporate debt to growing the U.S. economy, and calls for policymakers to reject any call to limit interest deductibility – as part of comprehensive tax reform or otherwise.

Pitchbook Q3 2013 Private Equity Breakdown

Pitchbook released its Q3 Private Equity Breakdown. The report finds PE deal-making was at a lackluster pace in 2Q 2013, reaching a new quarterly low since the depths of the financial crisis. PE firms invested $71 billion across 318 deals in the second quarter, down from 420 investments in 1Q 2013 and far off last year's stellar fourth quarter, in which 671 companies received $141 billion in PE money. One deal—Berkshire Hathaway and 3G Capital's $23.2 billion buyout of condiment maker H.J. Heinz—made up nearly one-third of all capital invested in the second quarter. A copy of the report can be obtained here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.