SEC Adopts Expansive (Albeit Slightly Softened) Private Funds Rules

Today, the SEC (U.S. Securities and Exchange Commission) has adopted the much anticipated so-called "Private Funds Rules" under the Investment Advisers Act of 1940 (the "Advisers Act").¹ The Private Funds Rules will impact not just SEC-registered investment advisers but also exempt reporting advisers, state-registered investment advisers and other unregistered investment advisers. The Private Funds Rules represent a substantial expansion of the SEC's regulation of private fund advisers that will likely have a significant impact on future SEC examination and enforcement activities. However, the SEC did soften the Private Funds Rules from the proposed version²in certain important ways, although certain of the prohibitions have been replaced with reporting and consent requirements that in certain circumstances may be onerous.