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ARTICLE · 21 MAY 2024

Private Fund Adviser Rule Q&A: Spotlight On Preferential Treatment

Katten
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n a follow-up to our summary of the SEC's new private fund adviser rule, Katten attorneys share their views on implementation questions related to a variety of new requirements applicable to advisers to private funds.

United StatesFinance and Banking
Wendy Cohen
Wendy Cohen
Adam Bolter
Adam Bolter
Christian Hennion
Christian Hennion
Lance A. Zinman
Lance A. Zinman
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Editorial Note: In a follow-up to our summary of the SEC's new private fund adviser rule, Katten attorneys share their views on implementation questions related to a variety of new requirements applicable to advisers to private funds. Our last Q&A focused on certain restricted activities. In this Q&A, Katten will examine the preferential treatment rule.

Q&A: GENERAL

Q: Does the new private funds rule prohibit all preferential terms granted to fund investors?

A: No — the rule creates a limited prohibition on certain preferential liquidity and portfolio transparency terms that are expected to have a material, negative effect on other investors (as described below); for all other preferential terms, the rule only prescribes disclosure.

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