SEC 2022 Risk Alert for Private Funds

On January 27, 2022, the SEC issued a risk alert (the "Risk Alert") detailing a number of deficiencies it observed in examinations of registered investment advisers. The Risk Alert reminds advisers of their fiduciary duty under the Advisers Act and focuses on four compliance issues: 1) failure to act consistently with disclosures, 2) misleading or inaccurate disclosures regarding performance and marketing, 3) due diligence failures with respect to investments, and 4) use of potentially misleading “hedge clauses.” Ira Kustin of Paul Hastings explains the key takeaways and what the Risk Alert indicates about the areas the SEC may increasingly scrutinize going forward.

 

 

  Ira Kustin is a partner in the investment management practice at Paul Hastings. He focuses his practice on advising sponsors of, and investors in, complex hedge, private equity and credit funds and regularly counsels private fund advisers on international investment platforms including in Europe, Asia, and Latin America.