The U.S. Securities and Exchange Commission (SEC) adopted final private fund rules under the U.S. Investment Advisers Act of 1940 (the Advisers Act) on August 23, 2023. Although the final rules are significantly less onerous than proposed in February 2022, they establish new requirements that will impact all private fund advisers, including both registered investment advisers (RIAs) and, in some cases, exempt reporting advisers (ERAs). In particular, while the SEC had proposed to ban outright certain categories of prohibited activities, the final rules adopt a disclosure (and in some cases investor consent) approach and also “grandfather” most existing funds from the prohibited activities provisions.

The new rules generally take effect 18 months after publication in the Federal Register, with certain of the prohibited activities rules subject to an effective date of 12 months after publication for fund groups with private fund assets under management of $1.5 billion or more.