“I viewed it in my mind like writing the ex-girlfriend one last letter, and I would never hear from the person,” said Morris, the managing partner of Olympus Partners, a buyout shop in Stamford, Conn.
Morris had no connections to Spencer Bachus, the letter’s intended recipient and the chief candidate to become chairman of the House Financial Services Committee after the GOP took the House of Representatives last November. In fact, Morris had no experience dealing with Washington, D.C., at all.
But Morris had been studying provisions of the Dodd-Frank financial reform law that would require private equity firms to register as investment advisers, and the registration provision struck him as a waste, he told sister publication Buyouts. “It was of no benefit to anybody. I dislike the foolish spending of money.”
As a result, he was surprised when his assistant came into his office one December day after Bachus was named chairman-designate to say two lawyers from Washington were on the phone. Morris’ initial thought was that he was being arrested, he joked. But it turned out that these callers were two Financial Services Committee staffers, and he spent two hours on the phone with them that day, talking in detail about the registration provision.
I have a profile of Morris in the upcoming issue of Buyouts, which hits subscribers’ mailboxes and our Web site starting Monday, looking at the improbable campaign by a group of mid-market firms to roll back the signature legislation to result from the financial crisis. And it still looks to me like a long shot, even though legislation has been introduced in the House with bipartisan support, sponsored by Robert Hurt, Republican of Virginia, and Jim Cooper, Democrat of Tennessee.
The thing is, time is short. By Morris’ calculations, firms must start the process by the first of April, if they haven’t started already, in order to be registered with the SEC by the deadline in early July. This is an eyeblink in Washington time. The only way firms have even a ghost of a chance of avoiding registration is if the SEC is willing to grant a delay—a decision that it has the discretion to make.
Executives of a group of buyout firms, including Atlas Holdings LLC, Brockway Moran & Partners and Welsh Carson Anderson & Stowe, wrote letters asking the SEC to use that discretion. This week at the Association for Corporate Growth’s InterGrowth conference in San Diego, I met Pam Hendrickson, the COO of The Riverside Company, who testified before Bachus’ committee last week. Her take: Private equity’s best hope is that the SEC, facing a host of other Dodd-Frank responsibilities, will give politics a chance to work, because the agency just doesn’t have the bandwidth, or the budget, to get to it all.
Steve Bills is a senior editor at Buyouts Magazine. Follow him on Twitter @Steve_Bills. Follow Buyouts tweets @Buyouts. For information on how to subscribe, contact Greg Winterton at firstname.lastname@example.org.