Private Equity Compliance Update: Conflicts of Interest, Fees and Expenses, Nonpublic Information, and the New Marketing Rule
Current SEC Focus and What to Expect From the Incoming Administration
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Thursday, February 25, 2021
- 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.
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This CLE course will discuss current compliance issues highlighted by the SEC after examining private fund advisers in 2020 as well as the SEC’s recently adopted Marketing Rule. The panel discussion will include conflicts of interest in fund activities and investments, fees and expenses disclosures, issues with the treatment of nonpublic information, and the compliance framework established under the new marketing rule.
Mr. Browder concentrates his practice on counseling investment advisers, investment funds, and broker-dealers concerning their compliance with all aspects of the federal securities laws. He has substantial experience providing ongoing regulatory and operational advice to managers of private funds – including hedge funds, private equity funds and venture capital funds – and sponsors of wealth management and separately managed account programs. A central component of his practice involves representing investment advisers in regulatory examinations and enforcement proceedings before the SEC. Mr. Browder is the co-author of Investment Advisers: Law and Compliance, a treatise on the regulation of asset managers, published by LexisNexis/Matthew Bender. He also serves as Secretary of the New York City Bar’s Committee on Investment Management Regulation.
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.
The SEC's Office of Compliance Inspections and Examinations (OCIE) recently issued a risk alert on private fund advisers' deficiencies. This guidance focuses on disclosure deficiencies regarding conflicts of interest and fees and expenses, and treatment of material nonpublic information (MNPI), among other compliance issues. Advisers and their counsel should carefully evaluate fund policies and procedures to avoid the pitfalls described in the OCIE Risk Alert.
Conflict of interest disclosures should include client investments, co-investment opportunities, and allocations within the fund. Special concerns arise when fund managers operate multiple funds that involve both debt and equity investments. Sponsors should have policies and procedures in place that properly allocate investments and resources between their PE and private credit funds.
Counsel to funds should thoroughly assess advisory fees and expense practices and clearly disclose fees and expenses allocated to the fund. Regarding the treatment of MNPI, managers should have internal processes for adding and removing restricted securities, enforcement of trading restrictions, and approval of personal securities transactions.
In December 2020, the SEC adopted a new marketing rule (Marketing Rule) which imposes many new and detailed compliance requirements on investment advisers that engage in marketing activities and/or are party to referral or solicitation arrangements with placement agents. Registered investment advisers will need to review their marketing and solicitation policies and procedures in light of the new compliance requirements in the Marketing Rule.
Listen as our authoritative panel provides an update on compliance issues currently emphasized by the SEC in its examinations and best practices for private equity advisers to address them.
- OCIE regulation of PE funds generally: types of funds and activities subject to examination
- Highlights from recent risk alert
- Conflicts of interest
- Fees and expenses
- Restricting the use of MNPI
- Other compliance issues
- What to expect from the Biden administration
- Marketing Rule
- Expanded Definition of Advertisement
- Performance Advertising
- Endorsements and Testimonials
The panel will review these and other important issues:
- What are the key areas of focus in the recent OCIE Risk Alert?
- What are the sources of conflicts of interest in fund management, and how should they be disclosed to investors?
- Why are fees and expenses violations so common, and what steps should funds take to ensure fees and expenses are fully disclosed?
- What kind of internal processes should be put in place to handle MNPI?
- What new policies and procedures are required to comply with the marketing rule?
- What new restrictions apply to performance advertising?
- How can advisers engage placement agents and other solicitors under the rule?
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