Clifford Chance

SEC Pursues Expense Allocation and Disclosure Actions Against Private Fund Advisers

24 November 2015

The US Securities and Exchange Commission is aggressively pursuing expense allocation and disclosure actions against private fund advisers and their personnel.  The actions allege violations of the anti-fraud provisions of Section 206 of the Investment Advisers Act of 1940, as amended (the "Advisers Act") and the rules thereunder.  Section 206 applies to both SEC-registered investment advisers and to "exempt reporting" advisers relying on the private fund adviser exemption to avoid SEC registration.  SEC-registered US and non-US advisers, as well as ERAs, should examine their current practices to prepare for further US regulatory scrutiny.

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