SEC Focus on Private Fund Managers: Examination Trends, Priorities and Deficiencies (Part Two of Two)

Although recent SEC enforcement actions have not centered on the private funds industry, the Commission is no less focused on scrutinizing manager practices. In light of that, it is invaluable to receive insights directly from staff personnel about areas the agency is focusing on, including fees and expenses; liquidity preferences; environmental, social and governance issues; and conflicts of interests. As the agency drills down on those areas, fund managers should be aware of interesting wrinkles in how it is conducting its examinations, such as the types of individuals it seeks to question and the scope of documents being requested. Those trends were addressed in a recent session hosted by the Practising Law Institute (PLI), moderated by Gibson Dunn partner Barry R. Goldsmith and featuring Marc E. Elovitz, partner at Schulte Roth; Ranah Esmaili, partner at Sidley Austin; Ken C. Joseph, managing director at Kroll, LLC; and Maurya C. Keating, Associate Regional Director of the SEC’s New York Regional Office. This second article in a two-part series reviews the discussion on SEC examination trends, priorities and deficiency letters. The first article outlined the portions of the program on recent enforcement actions targeting alternative data and so-called “shadow trading.” See our two-part coverage of another recent PLI panel: “Complications of Using Standard Form Provisions and Managing Administrative Burdens of Side Letters” (Sep. 9, 2021); and “Trends in Hot‑Button Terms in Side Letter Negotiations, Including MFNs and ESG Considerations” (Sep. 16, 2021).

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