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SEC finalizes rules for private fund advisers

Defining Issues | August 2023

The rules are designed to protect investors in private funds while promoting efficiency, competition and capital formation.

sec private fund advisers content image

The rules increase visibility into certain practices involving adviser 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.


  • Private fund advisers registered, or required to be registered, under the Investment Advisers Act of 1940 (the Advisers Act)
  • Certain rules apply to all private fund advisers, regardless of registration under the Advisers Act

Relevant dates

  • The final rules will be effective 60 days following the posting to the Federal Registrar using the below compliance date guidelines:
 Large private fund advisers (> $1.5B)Smaller private fund advisers
Audit rule and quarterly statement rule18 months

18 months

Adviser-led secondaries, preferential treatment, and restricted activities rules12 months

18 months

Amended advisers act compliance rule60 days

60 days

Key Impacts:

The SEC has released its final rules for private fund advisers. These rules aim to protect those who directly or indirectly invest in private funds by requiring a registered fund advisor to:

  • provide quarterly statements to private fund investors detailing performance, fees and expenses for each private fund it advises;
  • obtain an annual audit of each private fund it advises, meeting the requirements of the audit provision under Rule 206(4)-2(b)(4) (the SEC Custody Rule or the Custody Rule); and
  • obtain a fairness or valuation opinion from an independent opinion provider in connection with an adviser-led secondary transaction.

In addition, the final rules restrict all private fund advisers, including those that are not registered with the Commission under the Advisers Act, from

  • engaging in certain restricted activities unless appropriate disclosure is made, and in certain cases, consent is obtained.
  • providing certain types of preferential treatment that would have a material, negative effect on other investors, subject to certain exceptions; and other types of preferential treatment to any investor in a private fund, unless the adviser satisfies certain disclosure obligations. 

Report contents

  • Source and applicability
  • Fast facts, impacts, actions
  • Background
  • Summary of new requirements
  • Compliance dates

Download the document:

SEC proposal

Focus on investment management

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Eric Goldberg
Partner, Dept. of Professional Practice, KPMG US

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