ARTICLE · 10 FEBRUARY 2022

EXAMS Publishes Risk Alert For Private Fund Advisers

Holland & Knight

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As a piggyback to our prior posts on the U.S. Securities and Exchange Commission's (SEC) proposed amendments to Form PF (Jan. 21 blog and Jan. 26 blog),...

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Allison Kernisky

Jessica B. Magee

Scott Mascianica

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As a piggyback to our prior posts on the U.S. Securities and Exchange Commission's (SEC) proposed amendments to Form PF (Jan. 21 blog and Jan. 26 blog), we now dig deeper into the Division of Examinations' (EXAMS)¹ Jan. 27, 2022, Risk Alert (Alert) containing observations from its examinations of private fund advisers. The Alert, when combined with the Division's June 2020 alert,² draws on more than five years of private fund adviser examinations and contains useful signposts on possible issues on which EXAMS might refer a matter to the Division of Enforcement. In this post, SECond Opinions Blog highlights the staff's four main purported deficiencies: 1) failure to act consistently with disclosures; 2) use of misleading disclosures regarding performance and marketing; 3) due diligence failures relating to investments or service providers; and 4) use of potentially misleading "hedge clauses."

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