Brian Forman Quoted in RIA Intel on SEC’s New Private Fund Adviser Rule

Partner Brian Forman was quoted in the RIA Intel article “The SEC’s New Private Fund Advisor Rule Has a Provision That Affects All RIAs.” The article examines the new rule that brings significant changes to the $20 trillion private fund industry, including a provision requiring all registered investment advisors to document in writing the annual review of their compliance policies and procedures.

Regarding the amendment to Rule 206(4)-7, or the annual compliance rule, Brian, who chairs Morrison Cohen’s Investment Funds & Advisers Practice, told RIA Intel that although there was no official requirement for advisors to document the review process prior to this rule, it is common practice and something he always recommends that his clients do to better prepare for exams.

The newly adopted Private Fund Adviser Rule sets out specific requirements for private equity managers, hedge funds and other advisers offering private funds and will create significant new compliance and operational obligations for private fund advisers. In particular, the new Rule will impact the manner in which investment advisers to private funds may offer preferential treatment, known as side letters, to some investors in their private funds and raises some potential interpretive questions.

“It’s going to be a huge, huge mess for people to deal with. I think that determining which provisions you need to offer to all investors, based on whether those provisions materially impact one investor versus another, is going to be a subjective analysis that the industry is going to have a really hard time getting its arms around,” Brian said. He also thinks it might have a chilling effect on the industry, particularly smaller GPs.

Read the RIA Intel article here.

https://www.riaintel.com/article/2c3newmaeghd2i7gwj85c/wealth-management/the-secs-new-private-fund-advisor-rule-has-a-provision-that-affects-all-rias