Venture capital firms fall under proposed rules, even if not registered (Venture Capital Journal)

As part of the SEC’s effort to enhance private fund investor protection, venture capital firms that are not registered could find themselves under new restrictions. If newly proposed rules for private funds are approved as written, it would prohibit even unregistered private fund advisers, such as venture capital firms, from providing certain types of preferential treatment to investors in their funds, plus other preferential terms, unless it’s disclosed. Amy Lynch, FrontLine’s Founder and President, expects heavy industry pushback during the comment period. Ms. Lynch sees the SEC having a long haul with the proposal before it becomes final, and it may even issue a completely new proposal that solicits more comments. However, she doesn’t expect SEC Chairman Gary Gensler’s aggressive agenda to get too watered down, as he appears committed to more private fund regulation while he has a 3-1 voting edge on rule proposals. See Venture Capital Journal (subscription required), “Friday Letter: 3 things you need to do following the SEC’s bombshell proposal”