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Abstract: 

The proposed SEC rules would affect all advisers to private funds. If adopted as proposed, private fund advisers would be prohibited from, among other things, (i) charging private funds for certain costs, fees and expenses, (ii) agreeing to indemnification provisions for negligence or a breach of fiduciary duty, and (iii) granting certain preferential redemption terms or information rights. Private fund advisers also would be subject to prescriptive quarterly reporting, be required to have annual private fund audited financial statements prepared, and be required to obtain fairness opinions for adviser-led secondary transactions. The proposed rulemaking reflects sweeping new proposed requirements for the private fund industry and has garnered significant industry comment.

Keywords: Proposed Rules under 206(4) and 211(h); Fee Prohibitions; Ordinary Negligence Standard; Adviser Clawbacks; Private Fund Advisor Reporting and Auditing Requirements

Affiliations:  1: Willkie Farr & Gallagher LLP; 2: Willkie Farr & Gallagher LLP; 3: Willkie Farr & Gallagher LLP.