SIFMA AMG Criticizes SEC's Private Fund Advisers Proposal

SIFMA Asset Management Group ("SIFMA AMG") supplemented its criticism of the SEC's proposal to impose extensive additional regulation of private fund advisers.

As previously covered, the proposal would require investment advisers to (i) distribute quarterly statements to private fund investors, (ii) conduct at least annual financial statement audits, (iii) receive independent fairness opinions related to adviser-led secondary transactions and (iv) enhance compliance and disclosure requirements.

In a supplement to its previous comment on the SEC proposal, SIFMA AMG asserted that the current proposal (i) contains definitions that may cause private funds that are different in substance to be treated as "substantially similar"; (ii) imposes unfair tax consequences in the event of any clawback of payments to an adviser, ignoring certain provisions designed to protect partners and investors; and (iii) unduly interferes with private business decisions by investors to invest in funds with policies on the payment of expenses.

SIFMA AMG argued that the SEC must amend the proposal to "strik[e] the right balance between meaningful disclosure that investors can actually use without imposing undue costs and unintended consequences on advisers and investors rather than imposing a one-size-fits-all requirement on a diverse industry."

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