SEC Proposes Sweeping Rule Changes for Private Fund Advisers (Part 2 of 2)
As summarized in a previous Kirkland AIM, on February 9, 2022, the SEC voted 3-1 to propose significant new rules under the Investment Advisers Act of 1940 (the “Advisers Act”) to increase the regulation of investment advisers, including private fund advisers (the “Proposed Rules”).
The Proposed Rules represent the most extensive rulemaking applicable to private fund advisers by the SEC under Chairman Gensler, as well as the SEC’s most emboldened use to date of authorizing provisions under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the original rulemaking requiring most large private fund advisers to register under the Advisers Act during the 2011-2012 period. If adopted in their current form, the Proposed Rules would represent a departure from statements in recent years by the SEC and its Staff emphasizing disclosure of adviser practices, and result in a rare imposition of substantive requirements and prohibitions on private fund advisory contracts (e.g., limited partnership agreements and investment management agreements), particularly without express statutory authority regarding those requirements or prohibitions.
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