The House Financial Services Committee engaged in a two-day markup session of nearly two dozen securities and banking bills spanning a range of topics, including Dodd-Frank Act repeals, hedge funds and private equity, business development and closed-end companies, capital formation, proxy advisers, non-bank financial institutions, Fed oversight, and Iran disclosures. The markup and approval of all 23 bills followed a prior House FSC hearing that considered many of the same bills (See vote scorecard).
Dodd-Frank Act repeals. A trio of bills would repeal two of the specialized securities disclosure obligations imposed by the Dodd-Frank Act plus the settlement title of the reform bill. The provisions to be repealed would include:
- Conflict minerals—Repeal of Dodd-Frank Act Section 1502 (H.R. 4248).
- Mine safety—Repeal of Dodd-Frank Act Section 1503 (H.R. 4289).
- Restoring Financial Market Freedom Act of 2017 (H.R. 4247)—Repeal of Dodd-Frank Act Title VIII regarding payment, clearing, and settlement.
With respect to conflict minerals, the SEC’s recent guidance rolling back the due diligence requirement did not otherwise eliminate the need for U.S. companies to comply with the conflict minerals rule and many firms continued to make the same level of disclosure in 2017 as they had in prior filings. Similar European regulations will come online in January 2021 and will impact European Union importers whose conflict minerals imports are above specified volume thresholds.
Hedge funds and private equity. The Investor Clarity and Bank Parity Act (H.R. 3093) would amend the Bank Holding Company Act to permit hedge funds and private equity funds to use the same name or a variation of a name that the fund has in common with a banking entity that is an investment adviser to the fund if the fund meets certain requirements, which include that the investment adviser not be an insured depository institution, share a name with such institution, or use “bank” in the fund’s name. Currently, BHCA Section 13 (12 U.S.C. §1851) provides that federal regulators can permit banking entities to engage in certain activities despite the Volcker rule ban on many forms of proprietary trading, including organizing or offering a private equity or hedge fund if, among other things, the fund does not share the banking entity’s name.