SEC Proposes Radical Changes To Private Fund Regulation

On February 9, 2022, the U.S. Securities and Exchange Commission (the "SEC") proposed a package of new rules and amendments that will significantly affect all private fund advisers, including those that are not registered with the SEC under the Investment Advisers Act of 1940 (the "Advisers Act"). This package covers a range of issues including (i) new prohibitions on certain conflicted activities (including the charging of certain fees and expenses such as accelerated monitoring fees and the non-pro rata allocation of broken deal expenses), (ii) new prohibitions on preferential treatment relating to redemptions and fund and investment information and increased transparency on other types of preferential treatment, (iii) new quarterly statements to investors on performance, fees and expenses, and adviser and related person compensation, (iv) enhanced annual audit requirements, and (v) new requirements relating to adviser-led secondary transactions (including a