SEC Adopts Private Fund Adviser Reforms

On August 23, 2023, the US Securities and Exchange Commission (SEC) adopted new rules and amendments to the Investment Advisers Act of 1940 (the "Advisers Act") affecting private fund advisers. Under the new rules, all private fund advisers - regardless of registration status - will be prohibited from:

• Charging fees and expenses related to regulatory investigations, proceedings, or compliance without disclosure and consent from investors.
• Charging any fees related to sanctions of the private fund adviser in connection with a breach of the Advisers Act.
• Reducing the amount of an adviser clawback by taxes without disclosure of pre-tax and post-tax clawback calculation.
• Charging fees related to a portfolio investment on a non-pro rata basis, with certain exceptions.