|
The
changes, first proposed in February 2022, would require hedge
funds and private equity firms to detail all fees and expenses
on a quarterly basis, ban charging customers for unperformed
services or for adviser examination, and lower the bar for
investors to sue fund managers. Fund advisers, even those not
registered with the agency, would be prohibited from conflicts
of interest or giving any investor preferential treatment
without disclosing it.
At the time it was proposed, SEC Chair Gary Gensler said the
changes would benefit investors in such funds, typically wealthy
individuals and institutional investors like pension funds, and
companies raising capital from them.
"Private fund advisers, through the funds they manage, touch so
much of our economy. Thus, it's worth asking whether we can
promote more efficiency, competition, and transparency in this
field," he said.
Democratic Senators including Sherrod Brown and Elizabeth Warren
have voiced support, saying in a May letter that they address a
"critical need for greater transparency" for a sector that has
grown in market significance.
Private funds reported holding $20.4 trillion in gross assets by
the end of 2022, versus $8 trillion about a decade earlier,
according to data available on the SEC's website.
Industry groups and funds including Citadel LLC have pushed back
against the plan, saying the SEC is reaching beyond its
authority by scrapping agreed-upon liability terms and banning
specific fee models.
"These changes will increase cost, decrease competition and
transparency and, as a result, harm investors by giving them
fewer opportunities," Jennifer Han, chief counsel at the Managed
Funds Association, said in an interview.
Investors may see higher fees as the liability risk for fund
managers increases, some said.
"We don't see that the SEC is solving anything with this," said
Jack Inglis, CEO of the Alternative Investment Management
Association.
(Reporting by Chris Prentice and Carolina Mandl in New York;
Additional reporting by Douglas Gillison in Washington; editing
by Michelle Price and Nick Zieminski)
[© 2023 Thomson Reuters. All
rights reserved.]
This material may not be
published, broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
