SEC Finalizes Rules Affecting Private Fund Advisers

On August 23, 2023, the Securities and Exchange Commission (the SEC) released final rules under the Investment Advisers Act of 1940 (the Advisers Act), focused on private fund disclosures and sponsor practices (the Final Rules). Previously on February 9, 2022, the SEC had issued proposed rules on those issues (the Proposed Rules) and subsequently received significant industry interest and substantial feedback.

We highlight the key changes in the Final Rules from the Proposed Rules. Notably, the SEC did not adopt the controversial proposed rule that would have prohibited advisers from limiting their liability or seeking indemnification from a private fund or its investors for simple negligence (versus gross negligence). Our previous insight on the Proposed Rules is available here.