The Congressional Budge Office released a cost estimate of H.R. 3818, the Private Fund Investment Advisers Registration Act of 2009. Obviously, there will be an additional cost to fund managers that need to register with the SEC and operate under the SEC rules and oversight. There is also a real cost to the SEC (and therefore the taxpayers) for supervision of the newly regulated fund advisers.
The CBO estimates that the SEC will need an additional $140 million over the 2010-2014 period to implement the provisions of H.R. 3818. That means 150 employees new SEC employees by fiscal year 2011 to write regulations and undertake the additional examination and enforcement activities required by the bill. That’s about a 4 percent increase over the SEC’s 2009 staffing levels. The $140 million is to cover the cost of salaries and benefits, overhead, preparation of reports, and upgrades to information technology systems for the new employees.
The CBO report estimates that H.R. 3818 would result in 1,300 new registrations. That excludes venture capital funds which are exempted under this bill, but does include private equity firms that are exempted under the Senate version of the Private Fund Investment Advisers Registration Act. Doing the math, that results in $108,000 in additional costs for each new fund manager that registers.
On the manager side, the CBO estimates that it will only cost $30,000 for each fund manager to comply with Private Fund Investment Advisers Registration Act of 2009.