Senate bill aims to regulate hedge fund advisers

By Rachelle Younglai

WASHINGTON (Reuters) - Advisers of hedge funds, private equity, venture capital funds and other private investment pools would be required to register with the Securities and Exchange Commission, according to Senate legislation introduced on Tuesday.

Senator Jack Reed, chairman of the Senate Banking Committee's subcommittee on securities, said his bill would require advisers that manage more than $30 million in assets to register with the SEC. Smaller funds would be supervised by states.

Earlier this year, global hedge funds endorsed such plans in a bid to stave off more restrictive rules.

Policymakers, including the Obama administration, have called for more oversight of the loosely regulated trillion-dollar industry.

"Hedge funds have played an important role in providing liquidity to our financial system and improving the efficiency of capital markets," Reed said in a statement. "But as their role has grown so have the risks they pose."

The SEC previously tried to force hedge fund advisers to register with the agency, but a federal court overturned its rule in 2006.

Other bills have been introduced in both the Senate and U.S. House of Representatives that would require hedge fund adviser registration.

Representative Barney Frank, the chairman of the House Financial Services Committee, has said Congress will give the SEC the authority it needs to require hedge funds to register with the agency. Frank is expected to include such language in a broad package of legislation to overhaul financial regulation.