U.S. House lawmakers voted to relax oversight of the $2.4 trillion private equity industry just as its biggest players face record fines.

Apollo Global Management LLC, Blackstone Group LP, KKR & Co. and others have been scrutinized by regulators and penalized in recent months for failing to reveal some fee practices to clients. Disclosures about those firms’ holdings would be rolled back under the proposal, which was approved Friday in a 261-145 vote by the House of Representatives.

The bill, introduced in June by Robert Hurt, a Virginia Republican, would limit fund disclosures made to regulators and make advertising to wealthy investors easier for fund managers. While it isn’t likely to get the sufficient number of votes in the Senate to pass, the bill could eventually be included in a broader package, like when a watered down requirement for banks’ swaps trading became part of year-end spending legislation.

The White House said Tuesday that President Barack Obama’s staff would advise him to veto the private equity measure if it’s passed by Congress. Democratic presidential nominee Hillary Clinton weighed in Thursday, re-tweeting a post by one of her top advisers that urged lawmakers to reject the legislation because it “puts workers’ retirements at risk.”

The Securities and Exchange Commission has gone after private equity firms more forcefully than ever before in the 40-year-old industry’s history. Apollo settled allegations last month that it made misleading disclosures about fees, agreeing to pay a $12.5 million penalty and $40 million in disgorgement and interest. Blackstone and KKR agreed last year to separate settlements over how they informed investors of fund costs, paying $10 million in fines apiece and almost $50 million in combined disgorgement and interest. The firms haven’t admitted or denied wrongdoing.

Monitoring Fees

Private equity firms pool money from investors including pension plans and endowments with a mandate to buy companies within about five to six years, then sell them and return the money with a profit in a cycle lasting about 10 years. The firms typically charge an annual management fee of 1 percent to 2 percent of the funds and keep 20 percent of investment profits.

Among the issues the SEC has found is what’s known as accelerated monitoring fees. Monitoring fees, which private equity firms charge companies they own annually for advisory work, were accelerated into lump-sum payments when a company was sold or taken public ahead of schedule, even when future work wouldn’t be performed. The regulator found that Apollo and Blackstone didn’t adequately disclose the practice to clients.

The legislation would “roll back the clock” to the years before private equity firms were subject to “elementary oversight measures that numerous documented abuses have shown to be necessary for investor protection,” the Consumer Federation of America and Americans for Financial Reform wrote in a joint letter in June. “It would act to return private funds to the shadows.”

Private equity firms had to beef up disclosures following the 2010 Dodd-Frank Act, which gave the SEC oversight of managers of private investment funds. About 1,800 firms have registered since the law’s enactment, the House Financial Services Committee said.