Summary of SEC’s Finalized Private Fund Adviser Rules

September 19, 2023

Regulatory Alert

The United States Securities and Exchange Commission (“SEC”) recently issued a final set of rule amendments under the Investment Advisers Act of 1940, primarily aimed at enhancing the regulatory framework governing investment advisers to private funds. The new set of rules, as described in SEC Release No. IA-6383, is designed to protect investors who invest directly or indirectly in private funds. It focuses on increasing transparency in compensation arrangements and prohibiting conflicted arrangements involving private funds. Through an audited financial statement requirement, the new rules also aim to prevent fraudulent activities by registered investment advisers advising private funds. Finally, this set of new rules includes an amendment requiring all SEC-registered investment advisers to document in writing the annual review of their compliance policies and procedures.

SEC Proposes Amendments to Form PF for Investment Advisers to Private Funds

January 27, 2022

Yesterday, the U.S. Securities and Exchange Commission (“SEC”) proposed amendments to the Form PF, the confidential reporting form for certain SEC registered investment advisers to private funds.

Compliance Concerns for Private Funds

September 15, 2020

On Thursday, September 24 RIA Compliance Consultants will host a webinar, “Compliance Concerns for Private Funds,” at 12:00 PM CT. During this compliance training webinar, RCC’s Senior Vice-President, Jarrod James, will be joined by Dan McMahon of Koley Jessen to discuss the SEC’s recent Risk Alert entitled SEC’s Observations from Examinations of Investment Advisers Managing Private Funds. We will also discuss the key differences between an Exempt Reporting Adviser filing (ERA) for private fund advisers and full registration as an investment adviser along with the private fund information both filing-types must provide on Form ADV.

SEC Risk Alert – Investment Advisers Managing Private Funds

July 14, 2020

On June 23, 2020, the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert about its assessment of the compliance practices of SEC registered investment advisers that manage private equity funds or hedge funds (“private fund advisers”). In its Risk Alert, the SEC noted that over 36% of SEC registered investment advisers manage private funds, which represent a significant area of investment for pensions, charities, endowments, and others. Click here to read the SEC’s Risk Alert for Private Funds.

Private Fund Adviser Enforcement Action

June 26, 2018

The U.S. Securities and Exchange Commission (“SEC”) has charged 13 different registered investment adviser firms which advised private funds for failing to properly file reports with the SEC.

Nebraska Private Fund Adviser Exemption

May 17, 2016

On May 11, 2016, the Securities Bureau of the Nebraska Department of Banking and Finance (NDBF) adopted a new administrative rule that excludes investment advisers to private funds from the definition of “investment adviser”. This means that an investment adviser who solely advises private funds will not be subject to Nebraska’s investment adviser books and records requirements among other requirements for state registered investment advisers.

Washington Department of Financial Institutions Updating Investment Advisor Rules

October 10, 2012

The State of Washington’s Department of Financial Institutions recently sent out a memo to investment advisors registered in Washington that described potential updates, amendments, and additions to Washington’s investment advisor rules and regulations. Amendments to the custody requirements and an exemption for private fund advisors are the major provisions included in the memo, but the Washington Department of Financial Institutions also proposed changes for financial reporting, books and records, unethical practices, proxy voting, advisory contracts, and compliance procedures. You can access a copy of the draft amendments here.

GAO Studies Feasibility of SRO for Investment Advisers to Private Funds

August 04, 2011

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the U.S. Government Accountability Office (“GAO”) recently released a study regarding the feasibility of forming a self-regulatory organization (“SRO”) to oversee investment advisers to private funds. Click here for a copy of the study.