Practical Steps to Address the Increasing Compliance Burden of Funds’ LPAs, NDAs and Side Letters

The confluence of two trends is wreaking havoc on fund managers’ compliance departments. On the one hand, legal agreements are become lengthier and more complex, particularly as LPs demand increasingly idiosyncratic terms and treatment. On the other hand, the SEC – through proposed regulations and examination efforts – is directing ever-increasing attention at whether managers are fulfilling the obligations in their legal documents. Against that backdrop, ACA Group (ACA) recently hosted a webinar examining the evolving role of compliance as to side letters, limited partnership agreements, non-disclosure agreements and other fund documents, as well as ways CCOs and compliance professionals can rise to meet the growing challenges of satisfying the SEC’s and investors’ expectations. The program featured ACA managing director Vivek Pingili and partner Jordan Schwartz, as well as Sidley Austin counsel Chuck Daly. This article summarizes the key takeaways from the panelists. See “LP Perspective on Negotiating PE Terms and Structuring Bespoke Vehicles (Part One of Two)” (Feb. 1, 2022); and “Recent Trends in Key PE Terms Impacting Alignment of LP and Manager Interests” (Nov. 19, 2019).

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