The involvement of the SEC’s OCIE Private Funds Unit at a recent roundtable was a positive step in relations between the private equity community and the regulator. ACG’s Private Equity Regulatory Task Force hosted a roundtable for compliance professionals from middle-market private equity firms with a senior member of the unit. The meeting highlighted upcoming issues the OCIE is monitoring, such as valuations and cybersecurity, along with common deficiencies that the agency has found in previous exams. The OCIE formally released its Examination Priorities January 7, 2020.

The Private Funds Unit, which examines private equity and hedge funds, began conducting examinations in 2014 and analyses multiple areas. These include how private equity and hedge funds value their assets, disclose their fees, and communicate with investors. Their priorities generally align with the OCIE’s priorities; however, the unit looks at the areas with a specific private fund adviser lens.

Key takeaways from the OCIE Private Funds Unit

Up-front disclosure of fees and expenses, conflicts of interest and valuations were discussed as common reasons private equity funds receive “deficiency letters” after an examination. According to reports from the meeting, the SEC representative spoke about those issues, along with subscription lines of credit, cybersecurity, affiliated service providers, GP-led restructurings and other areas the OCIE is watching closely.

The OCIE’s willingness to interact with compliance professionals is a positive step in building a relationship with the private equity community and creating two-way communication channels between private equity and the SEC.

Did you know?

Bovill hosts a quarterly CFO/CCO private equity roundtable in Chicago bringing together compliance and finance professionals to discuss practices, current regulatory topics and encourage collaboration amongst Chicago’s PE community. If you’re interested in joining the group get in touch with Ross Goffi.

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