New SEC Rules for Private Fund Advisers: Reporting Requirements, Fees and Expenses, Conflicts of Interest
Indemnification of Advisers, Preferential Treatment of Investors, Secondary Transactions
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Tuesday, August 23, 2022
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will include the new reporting and audit requirements, limitations on fees and expenses, prohibitions and disclosures regarding conflicts of interest and preferential treatment of investors, and fairness opinions required with adviser-led secondary transactions.
Mr. Kustin is a partner in the Investment Management practice. He focuses his practice on advising sponsors of, and investors in, complex hedge, private equity and credit funds, and regularly counsels private fund advisers on international investment platforms including in Europe, Asia, and Latin America. Mr. Kustin’s clients range from market-leading global asset managers, to startups, mid-sized, and larger managers. He has extensive experience counseling established, global investment advisers as well as start-up managers in most aspects of their operations and regulatory compliance matters. He advises investment fund managers faced with complex restructurings, succession planning, crisis/conflict resolution, and consent solicitations. His practice includes advising clients on the structuring of arrangements between investment managers’ principals, seeding transactions, co-investment and secondary transactions, and LP-side investments in private funds.
Ms. Choe is a partner in Willkie’s Asset Management Group. She advises a wide range of pooled investment vehicles, including mutual funds, exchange-traded funds (ETFs), private funds (hedge funds, private equity funds and venture capital funds) and their sponsors and investment managers. Ms. Choe has in-depth knowledge of the various securities and other laws applicable to pooled vehicles and regularly counsels investment advisers and family offices on a variety of SEC regulatory filings and compliance matters.
Ms. Spiegel practices in the Investment Funds group and has over 20 years of experience advising on structuring, documentation, negotiation, and offering of U.S. and non-U.S. private funds, with an emphasis on private equity and closed-end credit funds. Her work also includes hedge funds, hybrid funds, separate account arrangements and “funds of one,” structured products fund, real estate funds and fund of funds and their respective management companies. Ms. Spiegel also advises on structuring and documentation of seeding arrangements, fund restructurings, carry plans and other profit-sharing plans, as well as upper tier governance arrangements and other employee arrangements. She counsels on various regulatory aspects of private funds, including the Investment Advisers Act, the Dodd Frank Act (including the Volcker Rule), Securities Exchange Act of 1934, Commodity Exchange Act, ERISA, and anti-money laundering issues. Ms. Spiegel has also advised on a number of investment management M&A transactions involving major global financial institutions.
On Feb. 9, 2022, the SEC proposed new and amended rules under the Investment Advisers Act of 1940 (the rules) that would significantly alter the regulatory regime for private fund advisers.
If adopted, the rules would require quarterly reports showing the fees, expenses, and performance for each private fund and maintenance of records relating to the quarterly statements. Private fund advisers must obtain an annual financial statement audit of each fund under management, performed under GAAP and meeting the independence requirement of Regulation S-X. All registered advisers must document in writing the annual review of their compliance policies and procedures.
Under the proposed rules, fund advisers would not be permitted to charge certain fees and expenses, seek indemnification or exculpation for the adviser's negligence or bad acts, borrow from a fund managed by the adviser, or provide certain types of preferential treatment to certain investors without disclosing the disparity to all other investors. They would also be required to obtain a fairness opinion in connection with certain adviser-led secondary transactions.
Listen as our authoritative panel discusses various facets of the rules and how they might affect private fund advisers' internal operations, external reporting, and interactions with fund investors.
- The SEC's unprecedented regulatory focus on private funds and fund advisers
- Reporting and audit requirements
- Standardized quarterly reporting
- Audit requirements
- Internal recordkeeping
- Conflicts of interest; prohibited activities
- Certain fees and expenses
- Indemnification and exculpation of advisers
- Preferential treatment of investors
- Adviser-led secondary transactions
- Timeline for compliance: what advisers should do now
The panel will review these and other important issues regarding the rules:
- What are the reasons behind the SEC's new focus on private funds?
- What information in quarterly investor reports was not previously required?
- How will the new rules, if adopted, affect the fee structure of private funds?
- What information regarding investor side letters must be disclosed to other investors?
- How do the rules address the conflicts of interest inherent in secondary transactions initiated by the adviser?
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