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ARTICLE · 07 FEBRUARY 2022

SEC Risk Alert: Certain Compliance Issues For Private Fund Advisers

Winston Taylor
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On January 27, 2022, the Division of Examinations ("EXAMS") of the Securities and Exchange Commission ("SEC") released a Risk Alert ("Risk Alert")...

United StatesCorporate/Commercial Law
Basil V. Godellas
Basil V. Godellas
Beth Kramer
Beth Kramer
Cole Beaubouef
Cole Beaubouef

On January 27, 2022, the Division of Examinations ("EXAMS") of the Securities and Exchange Commission ("SEC") released a Risk Alert ("Risk Alert")1 relating to certain compliance issues observed by EXAMS during examinations of registered investment advisers that manage private funds (referred to in the Risk Alert collectively as "private fund advisers"). The Risk Alert serves in part as an update to a similar risk alert relating to private fund advisers that was issued by the SEC's Office of Compliance Inspections and Examinations (EXAMS's prior name) in June 2020.2 

The Risk Alert reminds private fund advisers of their fiduciary duties to clients and focuses on four general topics. These topics are: (i) failure to act consistently with disclosures; (ii) use of misleading disclosures regarding performance and marketing; (iii) due diligence failures relating to investments or service providers; and (iv) use of potentially misleading "hedge clauses." 

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