IAA stands for advisors as private investment portals for clients

Investment Advisers may become private market investment portals for their retail clients in accordance with legislation championed by the Investment Advisers Association.

The chairman of the House Financial Services Committee, Republican Patrick McHenry of North Carolina, has made capital accumulation legislation a top priority. One way the GOP wants to increase startup funding is to allow more investors to buy unregistered securities.

Members of the group’s subcommittee on capital markets discussed several bills last month to change the definition of an accredited investor who is considered experienced enough to purchase so-called private placements.

As the bill moves through committee, the IAA is pushing for the addition of a provision that would allow investment advisor clients to qualify as accredited investors. The idea is that consultants who have fiduciary obligations to their clients will serve as an indicator of complexity. Under current regulations, investors must meet certain income and net worth thresholds in order to qualify for accreditation.

If an adviser believes that private equity investments are in the best interests of their client, they may make those investments on behalf of the client using their discretionary powers, IAA CEO Karen Barr said.

“This is just an opportunity to expand access to private investment for investors, for whom the investment adviser thinks. [it] it suits them,” Barr said on the sidelines of the IAA Compliance Conference in Washington on Tuesday.

The IAA met with French Hill representative R-Ark last week. and chairman of the House Financial Services Subcommittee on Determining an Accredited Investor. Hill is likely to play a role in drafting the capital accumulation bill.

“We have developed some language and we hope that it will become part of the package,” said Neil Simon, IAA vice president of government relations, during the conference panel.

The bill is likely to pass through committee and possibly through the Republican-majority House of Representatives. But his viability in the Democratic-controlled Senate is less clear.

Some Democrats, such as Congressmen Jim Himes of Connecticut and Brad Sherman of California, have expressed their willingness to consider the bill. But it will take more than a handful of Democrats to get the bill through Congress.

“The question is where you find bipartisanship,” Langston Emerson, a partner at government relations firm Mindset, said during a conference panel. “It’s just a very toxic political environment.”

Simon is looking for Democratic patrons.

“This should not be a biased question,” he said on the sidelines of the conference. “We’d like to get some support from the Democrats, and we’re trying to get that.”

Some consultants are intimidated by the thought that they can become a channel for private placements for their clients. They worry about possible liability.

Barr emphasized that the consultant would not be forced to open the door to private markets for a client who wants to enter them.

“It’s voluntary,” she said. “It’s an opportunity, not a requirement.”

Content Source

News Press Ohio – Latest News:
Columbus Local News || Cleveland Local News || Ohio State News || National News || Money and Economy News || Entertainment News || Tech News || Environment News

Related Articles

Back to top button