United States 114th Congress Status: Died 1 R cosponsors

HR 5424 — Investment Advisers Modernization Act of 2016

Last action — Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

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  1. ✓
    Introduced
  2. ✓
    In Committee
  3. Died in session

This bill died with 114th Congress. It reached “In Committee” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there is no live prognosis. It would have to be reintroduced in the current session to move again.

Summary

Investment Advisers Modernization Act of 2016 This bill directs the Securities and Exchange Commission (SEC) to amend specified regulations for investment advisers as they apply to private equity firms and private investment funds. (Sec. 2) The bill revises the disclaimer that, in the case of an investment adviser that is a partnership, an assignment shall not be deemed to result from the death, withdrawal, sale or transfer of minority interests to apply the disclaimer also to minority members, shareholders, for other equity owners of the investment adviser. Qualified clients of an investment adviser may consent to an assignment of the investment adviser contract at the time they enter into an advisory contract. The Investment Advisers Act of 1940 is amended to repeal the requirement that advisers organized as partnerships notify the other party to an investment adviser contract every time there is a change in the composition of the partnership. The SEC shall waive the application of specified antifraud prohibitions to advisers who advertise exclusively to: qualified clients, determined as of the time of the publication, circulation, or distribution of the advertisement rather than immediately before or after entering into the investment advisory contract; knowledgeable employees of any private fund to which the investment adviser acts as an investment adviser; qualified purchasers; or accredited investors (determined as if the investment adviser were the securities issuer and the time of the publication, circulation, or distribution of the advertisement were the sale of such securities). (Sec. 3) The SEC must amend a certain regulation regarding Form PF which registered investment advisers with at least $150 million in private funds assets under management must file with the SEC to report information about the private funds that they manage. This amendment shall state that an investment adviser to a private fund is not required to report any information beyond that which is required by sections 1a and 1b of Form PF unless it is a large hedge fund adviser or a large liquidity fund adviser. The SEC shall also amend the regulation requiring that client funds and securities of which an investment adviser has custody are verified by actual examination periodically by an independent public accountant. The SEC shall amend the proxy voting regulation to waive its application to any voting authority exercised by an investment adviser regarding client securities that are not public securities. (Sec. 4) On the other hand, the SEC may not: amend a specified regulation to extend its requirements and prohibitions concerning investment company sales literature to offerings of securities issued by private funds, or adopt substantially similar rules applicable to such offerings. (Sec. 5) This bill shall not apply to advisory services supplied to an investment company registered under the Investment Company Act of 1940. (Sec. 6) Any regulation referred to in this bill includes any successor regulation.

Bill Text

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Action History

  1. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

  2. Motion to reconsider laid on the table Agreed to without objection.

  3. On passage Passed by the Yeas and Nays: 261 - 145 (Roll no. 495).

  4. On motion to recommit with instructions Failed by the Yeas and Nays: 176 - 232 (Roll no. 494).

  5. Considered as unfinished business. (consideration: CR H5244-5246)

  6. POSTPONED PROCEEDINGS - At the conclusion of debate on the Torres motion to recommit, the Chair put the question on adoption of the motion and by voice vote, announced the noes had prevailed. Mrs. Torres demanded the yeas and nays and the Chair postponed further proceedings on the motion to recommit until later in the legislative day.

  7. The previous question on the motion to recommit with instructions was ordered without objection. (consideration: CR H5244)

  8. DEBATE - The House proceeded with 10 minutes of debate on the Torres motion to recommit with instructions pending a reservation of a point of order. The instructions contained in the motion seek to require the bill to be reported back to the House with an amendment to add at the end of the bill a section pertaining to Report on Emergency Vehicle Response Times of Companies Owned by Private Funds. Subsequently, the reservation was removed.

  9. Mrs. Torres moved to recommit with instructions to the Committee on Financial Services. (consideration: CR H5238-5239, H5244-5245; text: CR H5238-5239)

  10. H.Amdt.1391 On agreeing to the Foster amendment (A002) Agreed to by voice vote.

  11. H.Amdt.1391 The previous question was ordered on the amendment (A002) without objection.

  12. DEBATE - Pursuant to the provisions of H.Res. 844, the House proceeded with 10 minutes of debate on the Foster amendment.

  13. H.Amdt.1391 Amendment (A002) offered by Mr. Foster.

  14. DEBATE - The House proceeded with one hour of debate on H.R. 5424.

  15. Rule provides for consideration of H.R. 2357 and H.R. 5424.

  16. Considered under the provisions of rule H. Res. 844. (consideration: CR H5230-5239; text of measure as reported in House: CR H5230-5231)

  17. ORDER OF PROCEDURE - Mr. Hurt asked unanimous consent that the question of adopting a motion to recommit on H.R. 5424 may be subject to postponement as though under clause 8 of rule 20.

  18. Rule H. Res. 844 passed House.

  19. Rules Committee Resolution H. Res. 844 Reported to House. Rule provides for consideration of H.R. 2357 and H.R. 5424.

  20. Placed on the Union Calendar, Calendar No. 540.

  21. Reported (Amended) by the Committee on Financial Services. H. Rept. 114-698.

  22. Ordered to be Reported (Amended) by the Yeas and Nays: 47 - 12.

  23. Committee Consideration and Mark-up Session Held.

  24. Committee Consideration and Mark-up Session Held.

  25. Referred to the House Committee on Financial Services.

  26. Introduced in House

  27. Hearings Held by the Subcommittee on Capital Markets and Government Sponsored Enterprises Prior to Introduction and Referral.

Sponsors

Sponsorship breakdown

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1 sponsors · 0 co-sponsors · 546 not signed on

Sponsors (1)

Co-sponsors (0)

None.

Not signed on (546)

546 members have not signed on to this bill.

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"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

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Subjects

finance technology
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Frequently asked questions

What does HR 5424 do?
Investment Advisers Modernization Act of 2016 This bill directs the Securities and Exchange Commission (SEC) to amend specified regulations for investment advisers as they apply to private equity firms and private investment funds. (Sec. 2) The bill revises the disclaimer that, in the case of an investment adviser that is a partnership, an assignment shall not be deemed to result from the death, withdrawal, sale or transfer of minority interests to apply the disclaimer also to minority members, shareholders, for other equity owners of the investment adviser. Qualified clients of an investment adviser may consent to an assignment of the investment adviser contract at the time they enter into an advisory contract. The Investment Advisers Act of 1940 is amended to repeal the requirement that advisers organized as partnerships notify the other party to an investment adviser contract every time there is a change in the composition of the partnership. The SEC shall waive the application of specified antifraud prohibitions to advisers who advertise exclusively to: qualified clients, determined as of the time of the publication, circulation, or distribution of the advertisement rather than immediately before or after entering into the investment advisory contract; knowledgeable employees of any private fund to which the investment adviser acts as an investment adviser; qualified purchasers; or accredited investors (determined as if the investment adviser were the securities issuer and the time of the publication, circulation, or distribution of the advertisement were the sale of such securities). (Sec. 3) The SEC must amend a certain regulation regarding Form PF which registered investment advisers with at least $150 million in private funds assets under management must file with the SEC to report information about the private funds that they manage. This amendment shall state that an investment adviser to a private fund is not required to report any information beyond that which is required by sections 1a and 1b of Form PF unless it is a large hedge fund adviser or a large liquidity fund adviser. The SEC shall also amend the regulation requiring that client funds and securities of which an investment adviser has custody are verified by actual examination periodically by an independent public accountant. The SEC shall amend the proxy voting regulation to waive its application to any voting authority exercised by an investment adviser regarding client securities that are not public securities. (Sec. 4) On the other hand, the SEC may not: amend a specified regulation to extend its requirements and prohibitions concerning investment company sales literature to offerings of securities issued by private funds, or adopt substantially similar rules applicable to such offerings. (Sec. 5) This bill shall not apply to advisory services supplied to an investment company registered under the Investment Company Act of 1940. (Sec. 6) Any regulation referred to in this bill includes any successor regulation.
Who sponsors HR 5424?
HR 5424 is sponsored by Robert Hurt (R).
What is the current status of HR 5424?
This bill died with 114th Congress. It reached “In Committee” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.
Where can I track HR 5424?
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