SEC Focus On Adviser-Led Secondaries Continues

Adviser-led secondary transactions have seen explosive growth over the last five years. That growth has brought increased regulatory concerns over the conflicts of interests inherent in these transactions and a perceived lack of transparency into this market. New SEC rules adopted in 2023 will arm regulators with additional tools to identify, exam and investigate market practices. It is therefore critical for managers running an adviser-led secondary transaction to not only comply with the new rules as they become effective but to structure any such transaction with the SEC's concerns in mind.

The SEC's New Tools to Address Adviser-led Secondaries

In 2023, the SEC adopted new reporting obligations and other requirements for adviser-led secondary transactions. First, the amended Form PF reporting obligations require SEC-registered investment advisers ("RIAs"), within 60 days after the end of each quarter, to report the execution of an adviser-led secondary