SEC Launches Exams of Newly-Registered Private Fund Advisers
The SEC’s Office of Compliance Inspections and Examinations has announced that it will commence exams of newly-registered private fund advisers. These “Presence Exams” will focus on marketing, portfolio management, conflicts of interest, safety of client assets, and valuation. More specifically, the exam staff will review performance claims, allocation of investment opportunities, payments among funds and affiliates, personal securities transactions, independent fund audits, fair valuation of illiquid securities, and allocation of expenses. OCIE says it may refer problems to the SEC’s Division of Enforcement or another regulator if applicable. It also says that it will report its overall observations to the SEC and the public.