If you’ve been wondering why it’s taking so long to get the Dodd-Frank financial reform act implemented, here’s one example: Nearly a year after declaring that venture capital funds would be exempt from new registration requirements for private equity and hedge funds, the SEC finally attempted to define what they mean by “venture capital” yesterday. In his Term Sheet newsletter today, Dan Primack quipped, “Pretty sure Dodd-Frank’s subhead was ‘Kick the can down the road act of 2010.’”
The early reaction seems to be relief, with NVCA president Mark Heesen expressing cautious optimism that its members will be able to avoid registration. According to Mr. Primack registration “is disliked more because of legal costs than disclosure concerns.” But even exempt firms still have filing requirements. VC fund managers are required to submit limited “census” information to the SEC. Under a separate rules, they could also be subject to SEC examinations. The final language won’t come out until Monday, leaving VCs some time for objections.
Earlier this year at a conference in Philadelphia, Fred Wilson told the audience that Union Square Ventures would structure its funds however it needed to in order to avoid heavy regulation. Says peHUB: “Now, the question is, will he and USV have to do that?”