Sen. Reed reportedly to revive tight rules for venture capitalists

However, Reed's proposal is likely to trigger some early criticism from the high-tech venture capitalist community, in particular. When a similar provision cleared the House Financial Services Committee late last year, as part of that panel's financial regulatory reform bill, investors grumbled that it would excessively burden their firms. New reporting rules would require most in the industry to hire new compliance officers and install new computer systems, many told Hillicon Valley in October.

Other venture capitalists fretted the House's move to treat their work in the same manner as hedge funds, which some said posed more of a risk to the U.S. economy. Still more questioned the proposal's effects on the venture capitalist community writ large, which is still recovering in part from the 2008 economic meltdown.

“The issue we face is that our ecosystem is very fragile right now,”  Joshua Green, partner at Mohr Davidow Ventures in Silicon Valley, said at the time. “Tiny regulatory changes can affect the rate of capital going to innovators.”

Venture capitalists thus aimed to win an exemption from the bill's SEC registration requirement in return for a guarantee that they open their books to the federal government annually. While they did ultimately score a key concession in the House's bill -- an exemption for firms with under $150 million in assets -- the larger issue could return again if Reed's move to revive his tough rules succeeds in the Senate.

But the senator's measure is likely to encounter stiff opposition: Already, the National Venture Capital Association has signaled it could push back against Reed's amendment. However, a spokesperson later told The Wall Street Journal that the organization had not yet confirmed the proposal's existence.