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ADISA Address Concerns to What the SEC is Proposing Under the Investment Advisors Act of 1940

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Legislative & Regulatory Committee Co-Chair John Grady, ABR Dynamic Funds, drafted a letter on behalf of ADISA’s membership to the SEC addressing concerns on the slate of new rules and other requirements the SEC is proposing under the Investment Advisers Act of 1940.

At the heart of the Proposal is a set of new and/or enhanced requirements applicable to investment advisers that manage or advise “private funds” that would, if adopted:

  • obligate advisers to provide additional information to investors regarding the cost of investing in private funds and the performance of said funds;
  • require registered advisers to obtain annual financial statement audits for each private fund they advise and, in connection with an adviser-led secondary transaction, a fairness opinion from an independent opinion provider;
  • prohibit all private fund advisers, including those that are not registered with the Commission, from engaging in certain sales practices, conflicts of interest, and compensation schemes;
  • prohibit all private fund advisers from providing preferential treatment to certain investors in a private fund, unless the adviser discloses such treatment to other current and prospective investors; and
  • expand the type and amount of information that advisers must report and when reports must be made on Form(s) PF.

On behalf of its members, ADISA submits that each element of the Proposal should be subjected to additional or supplemental (i.e. lengthier) comment periods so that a full response to the SEC’s Proposal can be made.

In the event that the SEC is unwilling to extend its deadlines, ADISA believes that the Proposal should be carefully reviewed and trimmed back in a number of ways to avoid overly burdening investment advisers and inserting the SEC into the very terms under which capital providers interact with the advisers (and sponsors) of private funds.

View the letter in its entirety here.