The SEC’s New Private Fund Rules: What to Know

By: Kamil Godlewski

Product Manager
September 26, 2023

Private capital managers saw a major change set into motion this summer – on August 23, 2023, the Securities and Exchange Commission (SEC) adopted new rules and amendments under the Investment Advisers Act of 1940 (Advisers Act) that affect private funds and their advisers.  

These rules are designed to protect investors by improving transparency and addressing potential conflicts of interest while also prohibiting preferential treatment and restricting certain activities without disclosure or disclosure and consent. The new rules will require advisers to re-evaluate their existing practices and modify or enhance operational procedures and disclosures. The limitations and requirements of the new rules are expected to increase the cost and complexity of compliance for registered and non-registered advisers. 

This new set of rules sets a crucial new tone for regulation in the private fund industry. After allowing it to grow largely unchecked for decades in the U.S., the SEC is now sending the signal that it feels the private capital space has ballooned to a point where it requires guardrails in order to provide a fair experience to investors.  

So what does this mean for the average private fund manager? Read on for our primer of the new rules, and to learn why these transitions make capable accounting and reporting software more crucial than ever. 

New rules for Registered Private Funds Advisers  

Quarterly Statement Rule


Registered private fund advisers must distribute a quarterly statement to private fund investors that includes detailed information on the following:

Transition Period:

Reporting Timeframe:


Private Fund Audit Rule


Private fund advisers are required to obtain an annual financial statement audit of the private funds they advise, directly or indirectly.

Transition Period:



Adviser-Led Secondaries Rule


Funds undertaking an adviser-led secondary transaction are required to do the following:

Transition Period:



Applicable to All Private Fund Advisers

Restricted Activities Rule


Restricts all private fund advisers from engaging in activities that are contrary to the public interest and protection of investors. Advisers are required to either disclose or obtain consent and disclose certain activities to investors either before or after an event.

Permitted with Disclosure

Permitted with Disclosure and Consent


Restricts activities that private fund advisers can engage in which may result in a conflict of interest and potentially lead to investor harm. Requires additional disclosures and/or consent from investors. Will result in more time spent preparing required disclosures and in tracking information such as pre-tax and post-tax clawback values.


Preferential Treatment Rule


Prohibits all private fund advisers from providing preferential treatment terms to investors regarding:

Other preferential terms must be disclosed to current and prospective investors.

Transition Period:


Side letters and/or any other preferential agreements must be disclosed to all investors. Private agreements will no longer be applicable unless grandfathered under “Legacy Status.”

Legacy Status

Legacy status applies to governing agreements entered into prior to the Compliance Date if the applicable rule would require the parties to amend the agreements. Legacy status is provided under the prohibition’s aspect of the Preferential Treatment Rule and the aspects of the Restricted Activities Rule that require investor consent. Legacy status does not permit advisers fees or expenses related to “sanctioned matters.”


All Registered Advisers

Compliance Rule Amendment


All registered advisers, including those without private client funds, must document in writing the required annual review of their compliance policies and procedures.

Transition Period:

For full details on these amendments to the Investment Advisers Act of 1940, you can review the SEC Fact Sheet and Final Rule. 

How Allvue helps in this new regulatory era 

With these new rules emerging, it becomes more important than ever for private fund managers to run integrated data operations. Mistakes and delays may have had a negative impact on the investor experience before, but now come at a higher cost if they go against regulatory agencies. 

Luckily, Allvue offers a full suite of technology that answers the top challenges that these new rules pose. With all of this important information in one system, back-office teammates can stay in the loop rather than getting blocked by siloed technology when seeking out key data. 

These new rules inarguably place new burdens on private fund managers in how they set up investor relationships and communicate fund information to them. But with the right technology on their side, managers can significantly ease the transition. 

To learn more about Allvue’s platforms, watch our software in action or download a demo below. 

More About The Author

Kamil Godlewski

Product Manager

Kamil Godlewski is a product manager at Allvue Systems, a leading provider of investment management solutions. He has over 15 years of experience in finance and sales, working with various clients in the alternative investment space with an emphasis on private equity. He has a MBA in finance from Indiana University's Kelley School of Business and is a previous CPA license holder.

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At Allvue, we’re committed to harnessing technology and expertise to tackle the biggest challenges facing the private capital space. Our Resources hub, offering blog articles, whitepapers, case studies, videos, and more, shares industry best practices and reflects the experience and learnings of top Allvue experts and our partners motivated to see this industry continue to grow and thrive.

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