The US House Committee on Financial Services has voted – 30 votes to 26 – in favour of the Financial CHOICE Act, which would replace the Dodd-Frank Act and attempt to reduce regulatory oversight of the private equity industry.
Under the act, private equity managers would no longer be required to register as investment advisers with the Securities and Exchange Committee and may instead qualify as exempt investment advisors.
“The ‘Financial CHOICE Act’ outlines a more appropriate regulatory balance for private equity. It also correctly highlights that private equity is not a source of systemic risk,” a spokesman for the American Investment Council previously told Secondaries Investor sister publication pfm. “This proposal is further evidence that many key policymakers recognise that the industry should receive regulatory relief moving forward.”
Democrats on the Committee refused to offer a single amendment to the bill, according to a statement from the chair of the Financial Services Committee Jeb Hensarling, who introduced the Republican proposal in July.
“Democrats just voted against a bill that increases penalties against those who commit financial fraud. They just voted against a bill that ends taxpayer-funded bailouts, and they just voted against legislation that provides relief from Washington’s crushing regulatory burden for small banks, credit unions and consumers,” said Hensarling.
The Financial CHOICE Act, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, intends to hold Wall Street accountable with the toughest, strongest, strictest penalties ever – far greater than those in Dodd-Frank, according to Hensarling.