The calculus around disclosing the existence and results of SEC examinations changes fairly significantly when a fund manager receives a deficiency letter. Given that the SEC considers every deficiency in these letters to be “material,” it becomes far more likely that, at some point, fund managers will need to consider disclosing them to investors. There remains an array of considerations about when and to what subset of investors disclosure should be delivered, as well as whether to turn over the whole deficiency letter or only a summary. This final article in the three-part series will help fund managers navigate the circumstances around disclosing deficiency letters to investors, while also providing practical tips about the best ways to disseminate that information. The first article
described five sources of a fund manager’s obligation to disclose the existence or outcome of an SEC examination. The second article
detailed the differences between routine, sweep and cause examinations, including the corresponding disclosure requirements for each. See “Study Describes PE Co‑Investment Trends and Manager Reluctance to Disclose Deficiencies (Part Two of Two)
” (Mar. 26, 2019); and “Three Steps in Responding to an SEC Examination Deficiency Letter and Other Practical Guidance for Fund Managers From SEC Veteran and Sutherland Partner John Walsh
” (Feb. 13, 2014).