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Gary Gensler’s Vision for the Private-Funds Sector: Accountability and Cost Reduction

Capital Markets Regulation | Aug 9, 2023

Unsplash Chenyu Guan Wall Street - Gary Gensler's Vision for the Private-Funds Sector: Accountability and Cost Reduction

Image: Unsplash/Chenyu Guan

The U.S. Securities and Exchange Commission (SEC) is set to introduce a transformative regulatory shift that will shake up the private-funds industry, particularly private equity and hedge funds.

More Transparency and Investor Protection

  • The SEC's impending rule package is designed to bolster transparency, competition, and investor protection in the private-funds sector. This move comes as a response to concerns about fee structures, potential mismanagement, and risks to financial stability posed by private funds.
  • Key aspects of the proposed overhaul include:
    • Quarterly statements and annual audits for investors.
    • Increased liability for fund managers in cases of mismanagement or negligence.
    • Prohibition on offering preferential terms to specific investors via side letters.
    • Enhanced disclosure requirements to both investors and regulatory bodies.

Industry Resistance and Compliance

  • Since the introduction of these proposed rules, representatives from private equity, hedge funds, and venture capital have actively engaged with the SEC. Their lobbying efforts have even reached lawmakers, with industry stakeholders forming groups to challenge the SEC's plans. This resistance highlights the significant impact the SEC's proposed changes could have on their operations.

See:  Modernizing private equity capital markets in Canada

  • The upcoming SEC rule package signifies a pivotal moment for the private-funds industry, emphasizing transparency, accountability, and investor protection. As the regulatory environment undergoes this major shift, compliance officers will play a crucial role. They will guide private equity and hedge funds through these changes, ensuring adherence to the new requirements and promoting a culture of responsible fund management.

The impending regulatory changes by the SEC underscore a pivotal moment in the landscape of private funds, particularly for private equity and hedge funds.


NCFA Jan 2018 resize - Gary Gensler's Vision for the Private-Funds Sector: Accountability and Cost ReductionThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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