Foreword
The SEC's private fund adviser rule, adopted in August 2023, will impose significant new requirements on private fund advisers with respect to the operation of their private funds and relationships with fund investors. This Guide, prepared by AIMA in conjunction with Clifford Chance, is designed to help AIMA members navigate the new requirements for private fund advisers by addressing key questions and challenges as well as making recommendations as to the advance planning that members can perform prior to potential implementation of these requirements, which, absent judicial intervention, become effective for large private fund advisers on September 14, 2024, and small private fund advisers on March 14, 2025. Please note that AIMA is participating in litigation challenging the rule and has asked the court to invalidate the private fund adviser rule in its entirety.
The aim of the Guide is to explain the key concepts of the private fund adviser rule in detail. Although the Guide offers recommendations for members to attempt to comply with the final rule, AIMA remains concerned that the rule is unworkable and poses significant challenges to the private funds industry and AIMA members. Nothing in this Guide should be taken to imply that compliance with any provision in the rule is feasible or appropriate.
The core concepts of these requirements, to some degree, may have an element of ambiguity. Although some clarifications are still being sought from the SEC, as of the publication date of this Guide (i.e., as of April 25, 2024), some of the ambiguities will remain for advisers and their legal counsel to take a view on. However, the Guide may be used to identify the core concepts impacting advisers under the new requirements and the key questions advisers should be determining internally for their day-to-day operations to meet the demands of these requirements.
Jefferey LeMaster
Clifford Chance
Guide-related Excel Workbook
To aid AIMA members with documenting the scoping decisions under the private fund adviser rule, AIMA has developed an Excel spreadsheet designed to be used in tandem with the Guide. Throughout the text of the Guide, where there is a relevant section of the Excel spreadsheet, we have indicated that section by tab number and cell number. The Excel spreadsheet is accessible via the link below.
Other PFAR Resources
Separate from the Implementation Guide, AIMA, with the assistance of its private fund adviser rule service provider and law firm lawyer peer groups, has assembled a sample list of potential expense categories that AIMA members that are registered investment advisers ("RIAs") to hedge funds may consider when determining what expense categories they will use in their preparation of the mandated quarterly statements. The list can be downloaded via the link below.
RIAs advising other types of funds can use this sample list as a starting point but are likely to need to do more tailoring based on the facts and circumstances relevant to the RIA and the relevant fund.