On August 23, 2023, the Securities and Exchange Commission (SEC) adopted new rules and amendments aimed at increasing the regulation of private fund advisers.
“Private funds and their advisers play an important role in nearly every sector of the capital markets,” said SEC Chair Gary Gensler. “By enhancing advisers’ transparency and integrity, we will help promote greater competition and thereby efficiency. Consistent with our mission and Congressional mandate, we advance today’s rules on behalf of all investors — big or small, institutional or retail, sophisticated or not.”
During a recent webinar, hosted by the Private Funds CFO Network, we polled our audience to understand how prepared they feel for the new requirements which will be hitting their programs in the next year or so. And the results are in…
- Very prepared: 11%
- Somewhat prepared: 75%
- Not at all prepared: 14%
Key Aspects of the Recently Adopted Private Fund Adviser Rules
The recent adoption included multiple rules and amendments, as described by the SEC:
For Registered Private Fund Advisers:
- Provide investors with quarterly statements detailing information regarding private fund performance, fees, and expenses;
- Obtain an annual audit for each private fund; and
- Obtain a fairness opinion or valuation opinion in connection with an adviser-led secondary transaction.
For All Private Fund Advisers:
- Prohibit engaging in certain activities and practices that are contrary to the public interest and the protection of investors unless they provide certain disclosures to investors, and in some cases, receive investor consent; and
- Prohibit providing certain types of preferential treatment that have a material negative effect on other investors and prohibit other types of preferential treatment unless disclosed to current and prospective investors.
Additionally, the amendments will require all registered advisers, including those that do not advise private funds, to document in writing the annual review of their compliance policies and procedures.
Important Dates: Complying with the Recently Adopted Private Fund Adviser Rules
First things first, as firms prepare to comply with the new rules and their associated requirements, it is critical to understand the outlined compliance dates for each aspect of the adoption.
Mark your calendars for:
- Compliance Date (Amended Advisers Act compliance rule): November 13, 2023
- Compliance Date (Private Fund Audit Rule and the Quarterly Statement Rule): March 14, 2025
- Compliance Date (Adviser-Led Secondaries Rule, the Preferential Treatment Rule, and the Restricted Activities Rule):
- For advisers with $1.5 billion or more in private funds assets under management, September 14, 2024
- For advisers with less than $1.5 billion in private funds assets under management, March 14, 2025
Prepare for the Recently Adopted Private Fund Adviser Rules with COMPLY
Whether you fall into the very prepared or the not prepared at all category – or somewhere in between – COMPLY is here to you achieve compliance with confidence.
With the powerful combination of regulatory compliance technology, consulting and education, we’ve empowered over 7,000 clients (including some of the world’s largest financial institutions) to navigate the increasingly complex compliance maze with ease and accuracy.
Ready to see how COMPLY can support your firm? Schedule time to speak with an expert today!