Governance and Data Quality: How the SEC’s PFA Rules Could Live On
In August 2023, the SEC introduced new regulations to enhance oversight of private fund advisers, which critics argued would impose significant compliance costs and could overwhelm investors with excessive information.
In June 2024, the Fifth U.S. Circuit Court of Appeals vacated the rule, eliminating requirements for quarterly performance and fee reports. Despite this, many core elements remain relevant, prompting firms to consider adopting these measures to maintain competitiveness.
So, how much progress had firms already made with their preparations, how have they responded to the court’s judgment, and what does it mean for their future steps toward transparency, governance, and data quality?
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Overview
CSC's research shows that firms were generally well-prepared for the expected implementation of new regulations. Many surveyed believe that certain aspects of the proposed regulations are beneficial for the industry. They noted that the push for transparency is being driven by both investors and regulators. However, firms must continue to prioritize governance and data quality to enhance the services they provide to investors and other stakeholders, including regulators.
Key highlights from the report:
70% of private fund firms surveyed were prepared to implement the rules before they were vacated
72% of fund managers agree the rules were necessary to bring much-needed transparency to the private funds sector and will help drive greater asset growth and investor flows
60% agree that the private funds industry would undergo accelerated growth as the rules would improve investor trust
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