- Connecticut Introduces Bill to Regulate Private Funds
- March 19, 2010
- Law Firm: Curtis, Mallet-Prevost, Colt & Mosle LLP - New York Office
On February 8, 2010, Raised Bill No. 5053 entitled "An Act Concerning Transparency and Disclosure" was referred to the Connecticut Joint Committee on Banks. The stated purpose of the Raised Bill is to ensure transparency by requiring investment advisers to a hedge fund to disclose any potential conflicts of interest or interests that are likely to impair the investment adviser's duties and responsibilities to the fund or its investors.
As proposed, the Raised Bill requires any investment adviser to a hedge fund to disclose to each investor or prospective investor in the fund, not later than 30 days before any such investment, any financial or other interests the investment adviser may have that conflict with or are likely to impair the investment adviser's duties and responsibilities to the fund or its investors. As used in the Raised Bill, a "hedge fund" means any investment company located in Connecticut that (i) claims an exemption under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act of 1940, (ii) whose offering of securities is exempt under the private offering safe harbor criteria in Rule 506 of Regulation D of the Securities Act of 1933, and (iii) meets any other criteria as may be established by the Banking Commissioner. A hedge fund is located in Connecticut if it has an office in Connecticut where employees regularly conduct business on its behalf. As proposed, the current definition of hedge fund would also encompass other types of private investment vehicles, including private equity funds.
If enacted, the Raised Bill would take effect on October 1, 2010. A public hearing on the merits of the Raised Bill was held on February 25, 2010.