The Small Business Capital Access and Job Preservation Act, is one of several controversial bills seeking to amend the Dodd-Frank Act.

The Small Business Capital Access and Job Preservation Act, introduced by Congressman Robert Hurt, is one of several controversial bills recently introduced in the US House of Representatives seeking to amend the Dodd-Frank Act.

This legislation seeks to exempt private equity fund managers from the registration and reporting requirements imposed on investment advisers under the Investment Advisers Act of 1940, requirements scheduled to go into effect on July 21, 2011 under the Dodd-Frank Act. The bill seeks to extend to private equity fund managers a similar exemption to that granted to venture capital fund managers under the Dodd-Frank Act.

The legislation would follow the formula established with respect to venture capital fund managers in that it requires the Securities and Exchange Commission ("SEC") to define the term private equity fund in order to determine eligibility for the exemption. It also directs the SEC to adopt reporting and recordkeeping rules for private equity fund managers. Sponsors of the legislation feel that private equity firms do not pose the type of systematic risk that the Dodd-Frank Act was intended to address, that registration would impose an unwarranted burden on private equity fund managers and ultimately reduce the flow of capital for small and mid-sized businesses - resulting in a loss of job creation potential.

As currently enacted, the Dodd-Frank Act would not only require sponsors of committed private equity funds to register as investment advisers, but fundless sponsors and sponsors of "one off" investment vehicles would also likely be forced to register as investment advisers. This proposal could provide some much needed relief for those transactional players.

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