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B-335579 Sep 25, 2023 1 (2023-09-25)

handle is hein.gao/gaopfc0001 and id is 1 raw text is: U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 B-335579 September 25, 2023 The Honorable Sherrod Brown Chairman The Honorable Tim Scott Ranking Member Committee on Banking, Housing, and Urban Affairs United States Senate The Honorable Patrick McHenry Chairman The Honorable Maxine Waters Ranking Member Committee on Financial Services House of Representatives Subject: Securities and Exchange Commission: Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Securities and Exchange Commission (SEC) entitled Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews (RIN: 3235-AN07). We received the rule on August 24, 2023. It was published in the Federal Register as a final rule on September 14, 2023. 88 Fed. Reg. 63206. The effective date is November 13, 2023. According to SEC, the final rule is designed to protect investors who directly or indirectly invest in private funds by increasing visibility into certain practices involving compensation schemes, sales practices, and conflicts of interest through disclosure; establishing requirements to address such practices that have the potential to lead to investor harm; and restricting practices that are contrary to the public interest and the protection of investors. SEC also stated the final rule is likewise designed to prevent fraud, deception, or manipulation by the investment advisers to those funds. Specifically, SEC stated the final rule requires registered investment advisers to private funds to provide transparency to their investors regarding the fees and expenses and other terms of their relationship with private fund advisers and the performance of such private funds. SEC additionally stated the final rule also requires a registered private fund adviser to obtain 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 from an independent opinion provider. In addition, SEC announced the final rule restricts all private fund advisers, including those that are not registered with the SEC, from engaging in certain activities unless they provide specified disclosure to and, for certain restricted activities, obtain consent from investors. SEC further stated all private fund advisers are also prohibited from providing certain types of preferential treatment that would have a material, negative effect on other

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