The SEC's Private Fund Adviser Rules Explained — Part 1: The Restricted Activities Rule

On August 23, 2023, the U.S. Securities and Exchange Commission (SEC) adopted new and amended rules under the Investment Advisers Act of 1940, as amended (the Advisers Act), to address what it perceives as certain conflicts of interest and threats to investor protection pervasive in the private funds industry (the Private Fund Adviser Rules).¹ In a recent Client Alert, we discussed the Private Fund Adviser Rules, including Rule 211(h)(2)-1 (the Restricted Activities Rule), which will limit the ability of advisers to private funds regardless of whether they are registered with the SEC (private fund advisers) to engage in certain enumerated activities. This Client Alert serves to more fully explain the Restricted Activities Rule and offer practical guidance to private fund advisers on how to prepare to comply with its requirements.