The Securities and Exchange Commission adopted new rules and amendments designed to increase transparency and protect investors in private funds. The changes affecting advisers registered with the SEC under the Investment Advisers Act of 1940 were released in August 2023.

Private fund gross asset value has effectively doubled during the past seven years, from $10.3 trillion in fourth quarter 2015 to $20.5 trillion in fourth quarter 2022. These private funds have become important to financial markets, increasing exposure for direct investors and indirect investors participating in pension plans, retirement plans, endowments and foundations. As a result, the SEC is tailoring its rules to address risk and harm to investors and restrict adviser activity contrary to the public interest and protection of investors.

RULE CHANGES

The new rules require private fund advisers registered with the SEC to: