text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Hedge Fund Transparency Act''.
  
  SEC. 2. HEDGE FUND REGISTRATION REQUIREMENTS.
  
      (a) Definition of Investment Company.--Section 3(c) of the 
  Investment Company Act of 1940 (15 U.S.C. 80a-3(c)) is amended--
              (1) by striking paragraph (1);
              (2) by striking paragraph (7);
              (3) by redesignating paragraphs (2) through (6) as 
          paragraphs (1) through (5), respectively; and
              (4) by redesignating paragraphs (8) through (14) as 
          paragraphs (6) through (12), respectively.
      (b) Additional Exemptions.--Section 6 of the Investment Company Act 
  of 1940 (15 U.S.C. 80a-6) is amended--
              (1) in subsection (a), by adding at the end the following:
              ``(6)(A) Subject to subsection (g), any issuer whose 
          outstanding securities (other than short-term paper) are 
          beneficially owned by not more than 100 persons, and which is 
          not making and does not presently propose to make a public 
          offering of its securities.
              ``(B) For purposes of this paragraph and paragraph (7), 
          beneficial ownership--
                      ``(i) by a company shall be deemed to be beneficial 
                  ownership by one person, except that, if the company 
                  owns 10 percent or more of the outstanding voting 
                  securities of the issuer, and is or, but for the 
                  exemption provided for in this paragraph or paragraph 
                  (7), would be an investment company, the beneficial 
                  ownership shall be deemed to be that of the holders of 
                  the outstanding securities (other than short-term 
                  paper) of such company; and
                      ``(ii) by any person who acquires securities or 
                  interests in securities of an issuer described in this 
                  paragraph shall be deemed to be beneficial ownership by 
                  the person from whom such transfer was made, pursuant 
                  to such rules and regulations as the Commission shall 
                  prescribe as necessary or appropriate in the public 
                  interest and consistent with the protection of 
                  investors and the purposes fairly intended by the 
                  policy and provisions of this title, where the transfer 
                  was caused by legal separation, divorce, death, or any 
                  other involuntary event.
              ``(7)(A) Subject to subsection (g), any issuer, the 
          outstanding securities of which are owned exclusively by 
          persons who, at the time of the acquisition of such securities, 
          are qualified purchasers, and which is not making and does not 
          at that time propose to make a public offering of such 
          securities. Securities that are owned by persons who received 
          the securities from a qualified purchaser as a gift or bequest, 
          or in a case in which the transfer was caused by legal 
          separation, divorce, death, or any other involuntary event, 
          shall be deemed to be owned by a qualified purchaser, subject 
          to such rules, regulations, and orders as the Commission may 
          prescribe as necessary or appropriate in the public interest or 
          for the protection of investors.
              ``(B) Notwithstanding subparagraph (A), an issuer is exempt 
          under this paragraph if--
                      ``(i) in addition to qualified purchasers, 
                  outstanding securities of that issuer are beneficially 
                  owned by not more than 100 persons who are not 
                  qualified purchasers, if--
                              ``(I) such persons acquired any portion of 
                          the securities of such issuer on or before 
                          September 1, 1996; and
                              ``(II) at the time at which such persons 
                          initially acquired the securities of such 
                          issuer, the issuer was exempt under paragraph 
                          (6); and
                      ``(ii) prior to availing itself of the exemption 
                  provided by this paragraph--
                              ``(I) such issuer has disclosed to each 
                          beneficial owner that future investors will be 
                          limited to qualified purchasers, and that 
                          ownership in such issuer is no longer limited 
                          to not more than 100 persons; and
                              ``(II) concurrently with or after such 
                          disclosure, such issuer has provided each 
                          beneficial owner with a reasonable opportunity 
                          to redeem any part or all of their interests in 
                          the issuer, notwithstanding any agreement to 
                          the contrary between the issuer and such 
                          persons, for the proportionate share of that 
                          person of the net assets of the issuer.
              ``(C) Each person that elects to redeem under subparagraph 
          (B)(ii)(II) shall receive an amount in cash equal to the 
          proportionate share of that person of the net assets of the 
          issuer, unless the issuer elects to provide such person with 
          the option of receiving, and such person agrees to receive, all 
          or a portion of the share of that person in assets of the 
          issuer. If the issuer elects to provide such persons with such 
          an opportunity, disclosure concerning such opportunity shall be 
          made in the disclosure required by subparagraph (B)(ii)(I).
              ``(D) An issuer that is exempt under this paragraph shall 
          nonetheless be deemed to be an investment company for purposes 
          of the limitations set forth in subparagraphs (A)(i) and (B)(i) 
          of section 12(d)(1) (15 U.S.C. 80a-12(d)(1) (A)(i) and (B)(i)) 
          relating to the purchase or other acquisition by such issuer of 
          any security issued by any registered investment company and 
          the sale of any security issued by any registered open-end 
          investment company to any such issuer.
              ``(E) For purposes of determining compliance with this 
          paragraph and paragraph (6), an issuer that is otherwise exempt 
          under this paragraph and an issuer that is otherwise exempt 
          under paragraph (6) shall not be treated by the Commission as 
          being a single issuer for purposes of determining whether the 
          outstanding securities of the issuer exempt under paragraph (6) 
          are beneficially owned by not more than 100 persons, or whether 
          the outstanding securities of the issuer exempt under this 
          paragraph are owned by persons that are not qualified 
          purchasers. Nothing in this subparagraph shall be construed to 
          establish that a person is a bona fide qualified purchaser for 
          purposes of this paragraph or a bona fide beneficial owner for 
          purposes of paragraph (6).''; and
              (2) by adding at the end the following:
      ``(g) Limitation on Exemptions for Large Investment Companies.--
              ``(1) In general.--An investment company with assets, or 
          assets under management, of not less than $50,000,000 is exempt 
          under subsection (a)(6) or (a)(7) only if that company--
                      ``(A) registers with the Commission;
                      ``(B) files an information form with the Commission 
                  under paragraph (2);
                      ``(C) maintains such books and records as the 
                  Commission may require; and
                      ``(D) cooperates with any request for information 
                  or examination by the Commission.
              ``(2) Information form.--The information form required 
          under paragraph (1) shall be filed at such time and in such 
          manner as the Commission shall require, and shall--
                      ``(A) be filed electronically;
                      ``(B) be filed not less frequently than once every 
                  12 months;
                      ``(C) include--
                              ``(i) the name and current address of--
                                      ``(I) each natural person who is a 
                                  beneficial owner of the investment 
                                  company;
                                      ``(II) any company with an 
                                  ownership interest in the investment 
                                  company; and
                                      ``(III) the primary accountant and 
                                  primary broker used by the investment 
                                  company;
                              ``(ii) an explanation of the structure of 
                          ownership interests in the investment company;
                              ``(iii) information on any affliation that 
                          the investment company has with another 
                          financial institution;
                              ``(iv) a statement of any minimum 
                          investment commitment required of a limited 
                          partner, member, or other investor;
                              ``(v) the total number of any limited 
                          partners, members, or other investors; and
                              ``(vi) the current value of--
                                      ``(I) the assets of the investment 
                                  company; and
                                      ``(II) any assets under management 
                                  by the investment company; and
                      ``(D) be made available by the Commission to the 
                  public at no cost and in an electronic, searchable 
                  format.''.
  
  SEC. 3. IMPLEMENTING GUIDANCE AND RULES.
  
      (a) Forms and Guidance.--Not later than 180 days after the date of 
  enactment of this Act, the Securities and Exchange Commission shall 
  issue such forms and guidance as are necessary to carry out this Act.
      (b) Rules.--The Securities and Exchange Commission may make a rule 
  to carry out this Act.
  
  SEC. 4. ANTI-MONEY LAUNDERING OBLIGATIONS.
  
      (a) Purpose.--It is the purpose of this section to safeguard 
  against the financing of terrorist organizations and money laundering.
      (b) In General.--An investment company that relies on paragraph (6) 
  or (7) of section 6(a) of the Investment Company Act of 1940 (15 U.S.C. 
  80a-6(a) (6) and (7)), as amended by this Act, as the basis for an 
  exemption under that Act shall establish an anti-money laundering 
  program and shall report suspicious transactions under subsections (g) 
  and (h) of section 5318 of title 31, United States Code.
      (c) Rulemaking.--
              (1) In general.--The Secretary of the Treasury, in 
          consultation with the Chairman of the Securities and Exchange 
          Commission and the Chairman of the Commodity Futures Trading 
          Commission, shall, by rule, establish the policies, procedures, 
          and controls necessary to carry out subsection (b).
              (2) Contents.--The rule required by paragraph (1)--
                      (A) shall require that each investment company that 
                  receives an exemption under paragraph (6) or (7) of 
                  section 6(a) of the Investment Company Act of 1940 (15 
                  U.S.C. 80a-6(a) (6) and (7)), as amended by this Act, 
                  shall--
                              (i) use risk-based due diligence policies, 
                          procedures, and controls that are reasonably 
                          designed to ascertain the indentity of and 
                          evaluate any foreign person (including, where 
                          appropriate, the nominal and beneficial owner 
                          or beneficiary of a foreign corporation, 
                          partnership, trust, or other foreign entity) 
                          that supplies or plans to supply funds to be 
                          invested with the advice or assistance of such 
                          investment company; and
                              (ii) be subject to section 5318(k)(2) of 
                          title 31, United States Code; and
                      (B) may incorporate elements of the proposed rule 
                  for unregistered investment companies published in the 
                  Federal Register on September 26, 2002 (67 Fed. Reg. 
                  60617) (relating to anti-money laundering programs).
              (3) Publication date.--The Secretary of the Treasury, 
          shall--
                      (A) propose the rule required by this subsection 
                  not later than 90 days after the date of enactment of 
                  this Act; and
                      (B) issue the rule required by this subsection in 
                  final form not later than 180 days after the date of 
                  enactment of this Act.
      (d) Effective Date.--Subsection (b) shall take effect 1 year after 
  the date of enactment of this Act, whether or not a final rule is 
  issued under subsection (c), and the failure to issue such rule shall 
  in no way affect the enforceability of this section.
  
  SEC. 5. TECHNICAL CORRECTIONS.
  
      (a) Securities Act of 1933.--Section 3(a) of the Securities Act of 
  1933 (15 U.S.C. 77c(a)) is amended--
              (1) in paragraph (2)--
                      (A) by striking ``section 3(c)(3)'' and inserting 
                  ``section 3(c)(2)''; and
                      (B) by striking ``section 3(c)(14)'' and inserting 
                  ``section 3(c)(12)'';
              (2) in paragraph (4), by striking ``section 3(c)(10)(B)'' 
          and inserting ``section 3(c)(8)(B)''; and
              (3) in paragraph (13), by striking ``section (3)(c)(14)'' 
          and inserting ``section 3(c)(12)''.
      (b) Securities Exchange Act of 1934.--The Securities Exchange Act 
  of 1934 (15 U.S.C. 78a et seq.) is amended--
              (1) in section 3(a) (15 U.S.C. 78c(a))--
                      (A) in paragraph (12)(A)--
                              (i) in clause (iii), by striking ``section 
                          3(c)(3)'' and inserting ``section 3(c)(2)'';
                              (ii) in clause (v), by striking ``section 
                          3(c)(10)(B)'' and inserting ``section 
                          3(c)(8)(B)''; and
                              (iii) in clause (vi), by striking ``section 
                          3(c)(14)'' and inserting ``section 3(c)(12)'';
                      (B) in paragraph (12)(C), by striking ``section 
                  3(c)(14)'' and inserting ``section 3(c)(12)''; and
                      (C) in paragraph (54)(A)--
                              (i) in clause (ii), by striking ``exclusion 
                          from the definition of investment company 
                          pursuant to section 3(c)(7)'' and inserting 
                          ``exemption under section 6(a)(7)''; and
                              (ii) in clause (vii), by striking ``section 
                          3(c)(2)'' and inserting ``section 3(c)(1)'';
              (2) in section 3(g) (15 U.S.C. 78c(g)) by striking 
          ``section 3(c)(14)'' each place that term appears and inserting 
          ``section 3(c)(12)''; and
              (3) in section 12(g)(2) (15 U.S.C. 78l(g)(2))--
                      (A) in subparagraph (D), by striking ``section 
                  3(c)(10)(B)'' and inserting ``section 3(c)(8)(B)''; and
                      (B) in subparagraph (H), by striking ``section 
                  3(c)(14)'' and inserting ``section 3(c)(12)''.
      (c) Investment Company Act of 1940.--The Investment Company Act of 
  1940 (15 U.S.C. 80a-1 et seq.) is amended--
              (1) in section 2(a)(51) (15 U.S.C. 80a-2(a)(51))--
                      (A) in subparagraph (A)(i), by striking ``excepted 
                  under section 3(c)(7)'' and inserting ``exempt under 
                  section 6(a)(7)''; and
                      (B) in subparagraph (C)--
                              (i) by striking ``that, but for the 
                          exceptions provided for in paragraph (1) or (7) 
                          of section 3(c), would be an investment company 
                          (hereafter in this paragraph referred to as an 
                          `excepted investment company')'' and inserting 
                          ``that is exempt under paragraph (6) or (7) of 
                          section 6(a) (hereafter in this paragraph 
                          referred to as an `exempt investment 
                          company')'';
                              (ii) by striking ``section 3(c)(1)(A)'' and 
                          inserting ``section 6(a)(6)(B)(i)''; and
                              (iii) by striking ``excepted'' each place 
                          that term appears and inserting ``any exempt'';
              (2) in section 6 (15 U.S.C. 80a-6)--
                      (A) in subsection (a)--
                              (i) in paragraph (2), by striking ``section 
                          3(c)(1)'' and inserting ``section 6(a)(6)''; 
                          and
                              (ii) in paragraph (5)(A)(iv), by striking 
                          ``that would be an investment company except 
                          for the exclusions from the definition of the 
                          term `investment company' under paragraph (1) 
                          or (7) of section 3(c)'' and inserting ``that 
                          is exempt under paragraph (6) or (7) of section 
                          6(a)''; and
                      (B) in subsection (f), by striking ``excluded from 
                  the definition of an investment company by section 
                  3(c)(1)'' and inserting ``exempt under section 
                  6(a)(6)'';
              (3) in section 7(e) (15 U.S.C. 80a-7(e)), by striking 
          ``section 3(c)(10)(B)'' and inserting ``section 3(c)(8)(B)''; 
          and
              (4) in section 30 (15 U.S.C. 80a-29) in each of subsections 
          (i) and (j), by striking ``section 3(c)(14)'' each place that 
          term appears and inserting ``section 3(c)(12)''.
      (d) Investment Advisers Act of 1940.--The Investment Advisers Act 
  of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
              (1) in section 203(b) (15 U.S.C. 80b-3(b))--
                      (A) in paragraph (4) by striking ``section 
                  3(c)(10)'' each place that term appears and inserting 
                  ``section 3(c)(8)''; and
                      (B) in paragraph (5), by striking ``section 
                  3(c)(14)'' and inserting ``section 3(c)(12)''; and
              (2) in section 205(b) (15 U.S.C. 80b-5(b))--
                      (A) in paragraph (2)(B), by striking ``section 
                  3(c)(11)'' and inserting ``section 3(c)(9)''; and
                      (B) in paragraph (4), by striking ``excepted from 
                  the definition of an investment company under section 
                  3(c)(7)'' and inserting ``exempt under section 
                  6(a)(7)''.
      (e) Internal Revenue Code of 1986.--Section 851(a)(2) of the 
  Internal Revenue Code of 1986 (relating to the definition of regulated 
  investment company) is amended by striking ``section 3(c)(3)'' and 
  inserting ``section 3(c)(2)''.
target: Hedge Fund Transparency Act - Amends the Investment Company Act of 1940, Securities Act of 1933, the Securities Exchange Act of 1934, and the Internal Revenue Code to convert exceptions to the definition of an investment company into exemptions from mandatory registration as one.
  
  Exempts an investment company with assets, or assets under management, of at least $50 million from ordinary registration and filing requirements only if that company: (1) registers with the Securities and Exchange Commission (SEC); (2) files with the SEC a specified annual electronic information form, made available to the public, concerning ownership structure, investors, primary accountant and broker, and current assets value; (3) maintains such books and records as the SEC may require; and (4) cooperates with any request for information or examination by the SEC.
  
  Requires any investment company meeting such exemption requirements to establish an anti-money laundering program, according to rules prescribed by the Secretary of the Treasury, and report suspicious transactions.
  
  Requires such rules to require exempted investment companies to use risk-based due diligence policies, procedures, and controls reasonably designed to ascertain the identity of, and evaluate, any foreign person that supplies funds, or plans to supply funds, to be invested with the investment company's advice or assistance.
  
   Requires such rules also to require exempted investment companies to comply with the same requirements as other financial institutions for producing records requested by a federal regulator, particularly within 120 hours of receiving such a request.
feat_title: A bill to require hedge funds to register with the Securities and Exchange Commission, and for other purposes.