Fresh off the heels of a January 27, 2022, Risk Alert, in which the U.S. SEC staff cautioned about common deficiencies and concerns observed in examinations of private fund advisers, on February 9, 2022, the SEC itself proposed significant rule changes that, if adopted, will dramatically impact the fiduciary duty and disclosure obligations owed by private fund investment advisers to their clients—and potentially expose registrants and their management and certain employees to liability for non-compliance. On January 26, 2022, the SEC also released a proposal to amend Form PF, which includes the need for funds to report to the SEC within one business day significant valuation decreases.
Armed with almost 10 years of post-Dodd-Frank insights, gained from confidential and public filings, examinations and enforcement actions, the SEC unleashed a flurry of rule proposals that we believe will be on the active agenda and acted upon before the beginning of the 2022/2024 election cycle. If these rules are adopted, regulatory compliance burdens on advisers in the 18-trillion-dollar private fund sector will increase. We will also see increased transparency on familiar SEC private fund…
