Several mid-market firms have launched a last-ditch campaign urging Congress not to impose a new requirement that they register with the U.S. Securities and Exchange Commission.
The lobbying is being spearheaded by Rob Morris, managing partner of
The effort comes as regulators begin the task of writing rules for the Dodd-Frank Wall Street Reform and Consumer Protection Act, which President Barack Obama signed into law in July. The portion in question calls for firms with $150 million of assets or more under management to register as advisers with the SEC, which would entail filing annual paperwork, developing compliance policies, keeping tighter records and undergoing examinations, among other obligations.
At press time, Andy Bursky, chairman of Atlas Holdings, was scheduled to speak Jan. 26 during a House Financial Services Committee hearing on job growth. Bursky earlier told Buyouts he would ask legislators to delay imposition of the registration requirement to allow for more time to study its impact. He also planned to propose that new legislation be created to effectively nullify the requirement.
Bursky estimated it would cost his firm $300,000 to $500,000 a year to comply with registration. He also said it will distract him and his colleagues from investing in businesses, which he said preserves and creates jobs. “This is a public policy issue,” said Bursky, whose firm manages a $365 million fund. “I believe this is bad legislation that will in fact damage this country’s ability to create jobs.”
Thanks to the Republican takeover of the House of Representatives, Spencer Bachus is the Alabama Republican who now chairs the House Financial Services Committee. Morris, of Olympus, said he got a call from two lawyers working for the Financial Services Committee after writing a letter to Bachus in early November in which he protested the registration requirement. “They were a relatively sympathetic ear,” Morris said of the attorneys.
That contact led to a face-to-face meeting earlier this month with Bachus himself in which Bursky, Lou Mischianti, a partner at Olympus, and Peter Brockway of Brockway Moran were able to plead their case against registration. “He gets it,” Bursky said, when asked how Bachus responded to their concerns. “Broadly speaking, I think he’s tuned into the impact of over-reaching legislation on job creation.”
Around the same time, Morris placed a series of calls and e-mails to executives at similar-sized firms in an effort to mobilize them against the rule. As a result, Morris, David Lobel, founder of Sentinel Capital Partners; David Schnadig, managing partner at Cortec Group; and others wrote comments to the SEC seeking an exemption from registration.
Bursky and Morris know they have an uphill fight, considering the registration requirement is only a small piece of massive legislation that has already been signed into law. But they’re encouraged by Bachus’s reception and the fact that his committee asked Bursky to testify during its first hearing.
“It’s better to be heard than not heard,” Morris said. “I’m just hoping that common sense prevails.” Bachus was not immediately available for comment.