On February 9, in a 3-1 vote, the SEC approved a rule proposal (the "Proposed Rule”) that represents a sea-change in the Commission’s approach to private funds, with the Proposed Rule including provisions that would impose on private fund advisers certain standardized prohibitions and requirements. These include:

• prohibitions on certain fee and expense arrangements, and other adviser relationships with a private fund and its portfolio investments;

• prohibition on certain types of preferred terms for investors, and required disclosure with respect to other preferential terms;

• an obligation to provide quarterly statements containing specified fee, performance, and portfolio investment information to investors;

• mandatory private fund audits with certain requirements that go beyond the Custody Rule audit provisions;

• fairness opinion requirements for adviser-led secondaries; among other obligations.

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