The oversight of the Securities and Exchange Commission (SEC) now extends to hundreds more advisers to hedge funds and private equity firms than the agency first predicted. The SEC reportedly received approximately 1,300 registration applications before the March 30 deadline, against its original predictions that the new rules would only impact 750 companies.
Now the big question is—what will become of all the information the funds provided?
Many advisers to hedge and PE funds fear that the SEC will look to make an example of funds that failed to properly comply with the host of new rules or submitted inaccurate or incomplete information.
Even those funds that believe they have fully complied with the new rules are understandably anxious about an SEC exam, as this is largely unchartered legal territory for them. While the SEC used to examine less than ten percent of registered advisers due to lack of resources, it has recently ramped up its efforts by hiring additional examiners in 2011, and as discussed in a previous post, is seeking to hire even more examiners in 2013. With this in mind, we plan to release a publication under the Practical Guide Series about how to survive an SEC audit, so please stay tuned.
Hedge and PE funds are also wary about public access to information that was once closely guarded and is now available on the SEC’s website. The Form PF, which must be submitted by many funds later this spring, is also a concern. While the information contained in the form is intended solely for the confidential use of the SEC’s Financial Stability Oversight Council, many advisers are worried that their proprietary information could be compromised and released to the public.
The bottom line: Registration with the SEC does not mark the end of compliance concerns for advisers to hedge or PE funds. In fact, it may only be the beginning.
Eckerle Law offers a highest-quality and cost-effective alternative to the traditional law firm model for a wide variety of transactional and regulatory matters serving all your business law needs. Our experienced attorneys also provide a full range of compliance services for investment advisers, offering compliance tools that are tailored to fit the ever changing regulatory landscape as well as your business needs.
If your company would like to strengthen its business practices, please contact us today so we can leverage our experience to create real-life business and legal solutions to help your business thrive.