Private Funds Forced to Adapt to Ongoing SEC Regulations
News and Alerts
Introduction
2023 saw an adoption of new rules and amendments that affect Private Funds and those that advise them.
As the regulatory requirements for Private Funds increase, firms are increasing the time and effort focused on compliance.
Hedgeweek conducted a survey in June of this year, with results consistent with trends we have seen across the industry. In the midst of record-setting enforcement from the SEC, compliance teams are working to protect their firms from costly regulatory headaches.
Increased Need for Compliance
- The SEC has estimated almost $2 billion in costs for maintaining compliance regulations related to audit statements, quarterly performance reports, and unequal treatment of investors.
- The Hedgeweek survey found that 50% of hedge funds with AUM over $1 billion are likely to expand their compliance teams.
- For Funds with AUM under $250 million, 44% reported that they will increase their reliance on outsourced compliance solutions.
- This creates a challenge, as Funds with outsourced solutions still have oversight and due diligence requirements. Their success relies on their compliance partners having the experience and industry insight required to stay abreast of ongoing regulation.
- Maintaining compliance is not only a difficult task for smaller firms; larger firms may have the support staff, but the focus required from senior leadership may detract from important business goals.
Vigilant’s Conclusion
With the 2024 SEC priorities available, it is clear that the SEC will likely continue its agenda into the New Year.
Private Funds will need to make significant compliance adjustments in time for the effective date for the new rules adopted this year.
In such a dynamic environment, it is vital for firms to lean on industry professionals with the experience required to navigate effectively.
Outsourced Compliance offers numerous cost-effective solutions, allowing your firm to focus on its business goals.
Reach out to us today as you prepare for the upcoming effective dates of the new Private Fund regulations.