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Daniel Gallagher says SEC could extend exemptions under Dodd-Frank

Securities and Exchange Commissioner Daniel Gallagher said on Thursday that the commission could exercise its authority to extend exemptions to particular investment consultants in registering with the SEC, a requirement under the Dodd-Frank Act.

Under the Dodd-Frank Act of 2010, consultants and advisers who manage private equity and hedge funds with at least $150 million must register with the SEC. Some advisers are also required to file with the SEC using a Form PF. The SEC then shares the disclosure with the Financial Stability Oversight Council, which uses the data to monitor risk.

Gallagher spoke to a group of compliance professionals, saying that the Dodd-Frank regulations do not make a distinction between traditional retail investors and investors who are required to meet net worth and income requirements in order to purchase certain financial products.

Gallagher said that the SEC has authority to extend exemptions that are “necessary or appropriate in the public interest,” regardless of what the Dodd-Frank Act instructs the commission to do, Reuters reports.

Private fund advisers are concerned about how the Dodd-Frank requirements make distinctions and are “alarmed at the looming costs and unintended consequences expected to flow” from registration requirements, Gallagher said, according to Reuters.

Gallagher added that the requirements will protect investors who can afford to make investments in private equity and hedge funds. The requirements, however, will also place a heavy burden on the SEC.

Gallagher also said that while the SEC has the authority to make certain exemptions, the exemptions “should not become an effort to undercut or frustrate Congressional intent,” according to Reuters.

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