The Securities and Exchange Commission on February 9, 2022, voted three to one to propose a set of new rules and rule amendments under the Investment Advisers Act of 1940 that collectively, if adopted, would represent the most significant changes to the regulation of private funds and their advisers since the Dodd-Frank Act. These proposed rules would:

- Quarterly Statements: Require private fund advisers that are registered or required to be registered with the SEC (Private Fund RIAs) to provide investors with quarterly statements that include significant detail as to the fund’s performance and fees and expenses;

- Private Fund Audits: Require Private Fund RIAs to obtain an annual audit of each private fund, and cause the private fund’s auditor to notify the SEC upon the occurrence of certain events;

- Adviser-Led Secondaries: In connection with adviser-led secondaries, require Private Fund RIAs to obtain a fairness opinion and distribute it to investors, along with a summary of material business relationships between the Private Fund RIA and the opinion provider;

- Certain Other Prohibited Activities: Prohibit all advisers to private funds (including Private Fund RIAs, exempt reporting advisers, foreign private advisers, state-registered advisers and certain other investment advisers that are not required to be SEC-registered pursuant to Section 203(b) of the Advisers Act,