Private Equity And Hedge Funds Should Expect More SEC Scrutiny Ahead

Last week, SEC Chair Gary Gensler gave the keynote speech for the 2021 Institutional Limited Partners Association's virtual summit.  Gensler focused his remarks exclusively on private funds and detailed his view that private equity and hedge funds need more scrutiny and regulation.  Careful to differentiate his statements from those of the SEC, he listed the following subjects as areas he expects will receive additional SEC focus in the near term:

• Fees and Expenses:  Chair Gensler advocated for additional transparency regarding private fund fees and expenses which he hopes will lead to greater competition.  In particular he referenced the multiple types of fees common in private funds, including management fees, performance fees, portfolio company fees, consulting fees, advisory fees, monitoring fees, servicing fees, transaction fees, director fees, etc.—which, in his opinion, need streamlining or more transparency.