Global Trustee and Fiduciary Services Bite-Sized Issue 9 2023

Global Trustee and Fiduciary Services Bite-Sized | Issue 9 | 2023 9 QUICK LINKS CYBER FINTECH MONEY MARKET FUNDS SUSTAINABLE FINANCE/ ESG AUSTRALIA ASIA EUROPE NORTH AMERICA UNITED KINGDOM SEC Enhances the Regulation of Private Fund Advisers On 23 August 2023, the SEC adopted new rules and rule amendments to enhance the regulation of private fund advisers and update the existing compliance rule that applies to all investment advisers. The new rules and amendments are designed to protect private fund investors by increasing transparency, competition, and efficiency in the private funds market. To enhance transparency, the final rules will require private fund advisers registered with the SEC to provide investors with quarterly statements detailing certain information regarding fund fees, expenses, and performance. In addition, the final rules will require a private fund adviser registered with the SEC to obtain and distribute to investors an annual financial statement audit of each private fund it advises and, in connection with an adviser-led secondary transaction, a fairness opinion or valuation opinion. To better protect investors, the final rules will prohibit all private fund advisers from providing investors with preferential treatment regarding redemptions and information if such treatment would have a material, negative effect on other investors. In all other cases of preferential treatment, the SEC adopted a disclosure-based exception to the proposed prohibition, including a requirement to provide certain specified disclosure regarding preferential terms to all current and prospective investors. In addition, the final rules will restrict certain other private fund adviser activity that is contrary to the public interest and the protection of investors. Advisers, generally, will not be prohibited from engaging in certain restricted activities, so long as they provide appropriate specified disclosure and, in some cases, obtain investor consent. The final rules, however, will not permit an adviser to charge or allocate to the private fund certain investigation costs where there is a sanction for a violation of the Investment Advisers Act of 1940 or its rules. To avoid requiring advisers and investors to renegotiate governing agreements for existing funds, the SEC adopted legacy status provisions applicable to certain of the restricted activities and preferential treatment provisions. Such legacy status will apply to those governing agreements entered into in writing prior to the compliance date and with respect to funds that have commenced operations as of the compliance date. Link to Final Rule here Link to Fact Sheet here Link to Statement by SEC Chair Gary Gensler here Link to Statement by SEC Commissioner Caroline A. Crenshaw here Link to Statement by SEC Commissioner Mark T. Uyeda here Link to Statement by SEC Commissioner Jaime Lizarraga here Link to Statement by SEC Commissioner Hester M. Peirce here SEC Reopens Comment Period for Enhanced Safeguarding Rule for Registered Investment Advisers Proposal On 23 August 2023, the SEC reopened the comment period on its proposed rule that would redesignate and amend the current custody rule under the Investment Advisers Act of 1940 to enhance protections of customer assets managed by registered investment advisers, which was proposed by the SEC on 15 February 2023. The initial comment period ended on 8 May 2023. The reopened comment period will allow interested persons additional time to analyse the issues and prepare comments in light of the final rules and amendments to certain rules under the Investment Advisers Act of 1940 to enhance the regulation of private fund advisers. The comment period will remain open until 60 days after the date of publication of the reopening release in the Federal Register. Link to Reopening of Comment Period here Link to Fact Sheet here Link to Comments Received here