SEC Releases Private Fund Adviser Reforms
The Rules also include an amendment to existing Rule 206(4)-7 under the Advisers Act that will require all registered investment advisers to document the results of currently required annual compliance reviews in writing.
New requirements under the Investment Advisers Act
The new rules will require private fund advisers registered with the SEC to:
- 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.
The new rules will require that 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.
SEC compliance dates
For the Private Fund Audit Rule and the Quarterly Statement Rule, the compliance date will be 18 months after the date of publication in the Federal Register.
- for the Adviser-Led Secondaries Rule, the Preferential Treatment Rule, and the Restricted Activities Rule, the compliance dates are: for advisers with $1.5 billion or more in private funds assets under management, 12 months after the date of publication in the Federal Register
- for advisers with less than $1.5 billion in private funds assets under management, 18 months after the date of publication in the Federal Register.
Compliance with the amended Advisers Act compliance rule will be required 60 days after publication in the Federal Register
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