On August 23, 2023, the SEC approved—in a three-to-two vote along party lines—a 660-page final rule that significantly expands oversight, disclosure, and audit requirements for private funds. Only minor changes were made from the February 2022 proposal.
SEC-registered private fund advisers would be required to:
- Provide investors a quarterly statement with details on fund performance, fees, and expenses
- Obtain an annual audit for each private fund under the audit provisions of the custody rule
- Obtain a fairness opinion for adviser-led secondary transactions
All private fund advisers would be required to:
- Restrict certain activities without consent or disclosure
- Prohibit certain preferential treatment unless disclosed to current and prospective investors
All registered advisers, including those that do not advise private funds, would be required to document the annual review of their compliance policies and procedures in writing. This article provides details on the reforms.
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