Regulation of Private Fund Advisers Strengthened by SEC Rules and Rule Amendments

The US Securities and Exchange Commission (SEC) has adopted new rules and amendments to enhance the regulation of private fund advisers. The new rules are designed to increase transparency and protect private fund investors by promoting competition and efficiency in the private funds market. To this end, fund advisers registered with the SEC will be required to provide investors with quarterly statements on fees, expenses, and performance, an annual financial statement audit for each private fund they advise, as well as a fairness opinion or valuation opinion for adviser-led secondary transactions. In addition, all private fund advisers are prohibited from providing preferential terms or treatment to certain investors which would harm other investors, unless full disclosure is made. Legacy status provisions will also apply to governing agreements entered into prior to the compliance date, as well as funds that have commenced operations as of the date.