Reed Readies Private Equity Amendment to Wall Street Bill

Posted May 10, 2010 at 2:34pm

Sen. Jack Reed (D-R.I.) intends to draw venture capitalists and private equity firms into the financial regulatory overhaul.

Reed said in a Monday conference call that he will introduce an amendment that would require venture capital and private equity firms with more than $100 million in assets to register with the Securities and Exchange Commission. Senate Banking, Housing and Urban Affairs Chairman Chris Dodd’s (D-Conn.) financial services regulatory bill already requires similarly sized hedge funds to register.

“At the heart of it is the need for increased transparency, especially when you come to large pools of money,” Reed said. “We also believe this type of registration is not cumbersome to the industry but will afford the regulators a better sense of the overall market.”

Reed said he expects the Senate version of the overhaul to come to a vote by early next week at the latest. He said he would support the amendment being put in Dodd’s manager’s amendment. Sens. Tim Johnson (D-S.D.) and Sherrod Brown (D-Ohio) are co-sponsors of the amendment.

National Venture Capitalist Association President Mark Heesen said his group opposes being looped into the bill.

“We are a tiny, tiny industry,” Heesen said. “By registering [venture capitalists], it does not answer any of the problems that are out there that caused the financial meltdown and at the same rate burdens the very group that is creating jobs.”

Heesen said he believes the industry is on “good footing” with House Financial Services Chairman Barney Frank (D-Mass.) and Dodd.

“At the end of the day, the rational view that we should not have to register will prevail,” Heesen said.

The Private Equity Council testified in October before the House Financial Services panel saying it supported registration of large firms. By industry standards, a large firm would have more than $1 billion in assets.

A council spokesman did not immediately respond to a request for comment.