October 25, 2021

Volume XI, Number 298

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October 25, 2021

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SEC Is Exploring Reforms Regarding Private Fund Disclosure Of Conflicts Of Interest And Fees and Expenses

On September 14, 2021, U.S. Securities and Exchange Commission Chair Gary Gensler testified before the Senate Committee on Banking, Housing, and Urban Affairs. During his testimony, he stated that the SEC is exploring “potential reforms” regarding investment funds and managers.  Chair Gensler explained that one of the potential reforms under consideration by the SEC was ways to enhance disclosures by private fund managers regarding conflicts of interest and allocation of fees and expenses. He stated that he believed the SEC could “enhance disclosures in this area, better enabling pensions and others investing in these private funds to get the information they need to make investment decisions” and that “[u]ltimately, every pension fund investing in these private funds would benefit if there were greater transparency and competition in this space.”

Although apparently driven by concerns relating to pension fund investors, Chair Gensler did not provide any details regarding the potential reforms under consideration. The SEC has brought a number of enforcement actions against fund managers in prior years alleging failure to disclose various conflicts of interest and inadequate fee/expense disclosure under general fiduciary principals. The SEC may now be considering more proscriptive disclosure requirements.

In House testimony given earlier this year, Gensler noted the significant growth in private funds and private fund assets over the past five years.  Given these changes, he had requested staff recommendations regarding potential enhanced reporting and disclosure through Form ADV, Form PF, or other possible reforms.

© 2021 Proskauer Rose LLP. National Law Review, Volume XI, Number 263
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About this Author

Joshua Newville, Proskauer Rose, regulatory enforcement attorney, industry compliance legal counsel, securities exchange commission lawyer
Partner

Joshua M. Newville is a partner in the Litigation Department in New York. His practice focuses on commercial litigation and regulatory investigations. Mr. Newville advises companies and individuals in securities litigation and compliance matters. He also focuses on internal investigations and enforcement matters. Prior to joining Proskauer, Josh was senior counsel in the U.S. Securities and Exchange Commission’s Division of Enforcement, where he investigated and prosecuted violations of the federal securities laws. Josh served in the Enforcement Division’s Asset...

212-969-3336
Samuel Waldon, Proskauer Law Firm, Washington DC, Corporate Law and Litigation Attorney
Partner

Sam Waldon is a partner in the Litigation Department and a member of the Securities Litigation, White Collar Defense & Investigations and Asset Management Litigation Groups.

Sam’s practice focuses on securities litigation, enforcement and regulatory matters. He represents corporations and financial institutions, and their officers, directors and employees, in investigations, exams, internal investigations and litigation. Sam has in-depth experience in a broad range of Securities and Exchange Commission (SEC) enforcement matters, including...

202-416-6858
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