Articles Tagged with Private fund advisors

Speaking before the Private Equity International Private Fund Compliance Forum, Securities and Exchange Commission Office of Compliance Inspections and Examinations Director Carlo di Florio reminded the audience that investment advisers are fiduciaries to advisory clients, including client funds. He made his comments just as the SEC is preparing to start overseeing large private equity firm advisors. Di Florio was careful to emphasize that the views he was sharing were his own.

Per the Dodd Frank Wall Street Reform and Consumer Protection Act, private equity fund advisors must now register with the SEC. In the wake of this requirement, there are now nearly 4,000 investment advisers registered with the SEC. These private fund advisers offer advise on nearly 31,000 private funds with $8 trillion in assets.

Di Florio talked about how it was the responsibility of advisors of private equity firms to fairly allocate their expenses and fees. He said must pinpoint any conflicts related to the structure and kinds of investments that their funds usually make and ensure that these conflicts are correctly “mitigated and disclosed.” Regarding the need for pooled investment vehicle advisors to make sure that material facts are disclosed to current and potential investors, he said that to do otherwise could constitute securities fraud.