SEC Proposes Extensive Regulation of Private Fund Advisers
The SEC proposed extensive new regulation of private fund advisers under the Advisers Act. The SEC stated that it recognizes the important role private funds and their advisers play in the financial markets and that the purpose of the amendments – as outlined in the SEC rule proposal and fact sheet – is to expand the regulation of private fund advisers.
Proposed New Rules and Amendments
The proposed new rules and amendments would require the following:
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Quarterly Statement Rule. The proposal would require investment advisers to distribute quarterly statements to private fund investors, including information related to (i) fees and expenses, (ii) compensation to the adviser or its related persons, and (iii) fund performance. There would be different requirements for liquid funds versus illiquid funds.
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Private Fund Audit Rule. The proposal would require financial statement audits (i) at least annually, or (ii) upon liquidation and, in each case, delivered to private fund investors promptly after…
