2020 SEC risk alert provides guidance for private fund advisers

Abstract

Purpose

To analyze the U.S. Securities and Exchange Commission (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) June 2020 Risk Alert, which identified three categories of deficiencies that the SEC regularly finds in its reviews of advisers to private funds, in order to understand its guidance and recommend best practices.

Design/methodology/approach

The study discusses the categories of deficiencies that the SEC regularly finds in its reviews of private fund advisers, current SEC enforcement trends, and recommendations for disclosures, internal controls, policies and procedures.

Findings

The SEC will expect private funds to identify and remedy regular deficiencies in three primary categories: gaps in client and investor disclosures regarding conflicts of interest; deficiencies in disclosures related to fees and expenses; and issues with policies and procedures regarding the treatment of material nonpublic information.

Practical implications

Private fund advisers should expect increased scrutiny during examinations on the identified deficiencies and use this opportunity to be proactive in addressing these issues.

Originality/value

Expert analysis and guidance from experienced securities enforcement attorneys.

Citation

Breen, K. and Guberman, P. (2020), "2020 SEC risk alert provides guidance for private fund advisers", Journal of Investment Compliance, Vol. 21 No. 1, pp. 49-54. https://doi.org/10.1108/JOIC-08-2020-0014