The year 2015 marked the fifth anniversary of passage of the Dodd-Frank Act and, for many private fund managers, the third anniversary of SEC registration under the Investment Advisers Act. The past year also saw a number of notable SEC regulatory trends and developments affecting private fund managers. Here are the highlights.
Undisclosed Conflicts of Interest
Throughout 2015, the SEC focused on undisclosed conflicts of interest, noting that it would make finding such conflicts an examination priority and that it would follow through with enforcement actions when it found such conflicts. In particular, the SEC keyed in on the following … Read more
The treatment of special purposes vehicles (“SPVs”) used to facilitate investments in portfolio companies has presented issues under Rule 206(4)-2 under the U.S. Investment Advisers Act of 1940 (the “Custody Rule”) since the current version of the Custody Rule was adopted in December 2009. Private fund managers often subject their funds to an annual audit in accordance with the “Annual Audit Approach” to avoid certain burdensome provisions of the Custody Rule, including a “surprise” examination by an independent accountant. One question has been the circumstances under which the SPV should be separately audited from the main fund for purposes of … Read more