On 7 November 2024, the US Securities and Exchange Commission’s (SEC) Divisions of Examinations, Investment Management, and Enforcement hosted a virtual panel on compliance and enforcement topics as part of its broader National Compliance Outreach Seminar. This blog post provides a high-level overview of the private fund topics that were covered, but the agenda included a broad array of additional topics.

Marketing Rule Compliance

Shane Cox of the Division of Examinations discussed extracted performance, net performance, hypothetical performance, and performance substantiation issues under the Marketing Rule. He also encouraged advisers to consider whether certain communications made through intermediaries constitute “advertisements” under the Rule.

Form PF

Adele Kittredge Murray of the Division of Investment Management summarized two recently adopted amendments to Form PF and related reporting requirements for advisers. Form PF is an SEC examination priority for 2025.

MNPI Policies

Lee A. Greenwald of the Division of Enforcement discussed the recent SEC enforcement actions dealing with material nonpublic information (MNPI), including for CLO trading and information received through ad hoc creditor committees. He encouraged advisers to ensure that their MNPI policies are tailored to address unique components of their business lines.

Valuation

The panelists also discussed challenges with valuing private credit investments. They encouraged advisers to disclose in their fund documents how a deterioration in the value of a private credit investment would affect fees payable to the adviser.

Form ADV Fee and Expense Disclosures

Finally, the panelists encouraged advisers to ensure that they include in their Form ADV brochures fulsome disclosures of fees and expenses charged to clients.