| Venture Capital Emerges Untouched In Financial Services Reform Legislation |
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After months of debate and last minute attempts to amend the bill, both the Senate and the House of Representatives passed legislation which leaves the venture capital industry free from any requirements to register with the SEC. Under the House version of the bill the venture community may have to submit additional information to the SEC but will not have to register. The Senate bill has no such requirement. We are seeking to have the Senate language made part of the bill that is eventually signed into law. As you may recall, the venture industry was originally included in the pool of private investment funds that would have to undergo costly SEC registration. The NVCA firmly asserted that the venture industry does not pose systemic risk to the financial system – and Congress ultimately agreed. Once a final bill passes, it will be up to the SEC to define venture capital investment, and we look forward to playing a role in that process. Additionally, we were pleased that two amendments were included in the final Senate bill which addressed concerns both NVCA and the Angel Capital Association had regarding raising the accredited investor limit and revoking a federal pre-emption for Reg D filings. Again, both of these provisions were originally problematic until the NVCA and the ACA made our concerns clear to Senate leadership. While the final bill was generally positive for our industry, some of our key partners have been impacted, particularly banks who invest in venture funds. As the bill makes its way to conference and then towards final passage, we will be watching for any change to the Volcker rule which prohibits banks from investing directly into private equity funds, as this provision will negatively impact a number of NVCA members. It is worth noting that the language in this legislation came down to the wire and NVCA staff worked hard to fight last ditch amendments that asked for venture to register. We are pleased that our team was able to shepherd the correct final language through amidst a very heated debate. |
