Final Private Fund Reforms: Issues to Monitor in Preferential Treatment, Adviser‑Led Transactions and Annual Audit Rules (Part Three of Three)

Amidst the private fund industry’s growth and maturation in recent years, the SEC has been interested in finding a way to ostensibly protect investors by imposing structures and certain minimum standards on fund managers. The most prominent manifestation – although hardly the only one to date or to come – is the final rules (Rules) for private fund advisers issued by the SEC on August 23, 2023. Although certain high-profile elements of the Rules will garner the most attention among compliance professionals, there are changes throughout the Rules that will alter how fund managers operate going forward. The Private Equity Law Report interviewed a broad range of industry professionals to discuss the most meaningful and impactful reforms in the Rules that PE sponsors can expect to grapple with over the next 12‑18 months, as applicable. This third article in a three-part series highlights critical considerations in the Rules targeting disclosures in connection with preferential treatment of investors; fairness or valuation opinions in connection with adviser-led secondary transactions; mandatory annual fund audits; and documentation of annual compliance reviews. The first article analyzed the five categories of restricted activities, and the second article parsed issues with the quarterly reporting requirements. See “Prevailing Trends in Transactions, Terms and Considerations in the Secondary Market (Part One of Two)” (Dec. 29, 2022).

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