Identifying Regulatory Vulnerabilities In Private Equity

1
Identifying Regulatory Vulnerabilities In Private Equity

Identifying Regulatory Vulnerabilities In Private Equity by PitchBook

Now that the vast majority of private equity firms must register with the SEC as registered investment advisers, the regulatory burdens are far greater than any time before. In fact, many LPs have introduced new processes to match the increased focus of the SEC on private equity investments. Middle market PE firms can meet the challenges of increased scrutiny by ramping up their compliance procedures.

For starters, private equity professionals should consider developing robust internal controls and ensuring their limited partnership agreements are fully transparent regarding fees and expenses. Fund managers are advised to form an internal advisory group to review and approve specific fund-level activities in accordance with LP agreements.

This Value Fund Generated Significant Alpha In 2021

InvestGrizzlyRock Value Partners was up 34.54% net for 2021. The fund marked 10 years since its inception with a 198% net return, resulting in an annual return of 11.5%. GrizzlyRock enjoyed 14.8% long alpha against the S&P 500 and 26.9% against the Russell 2000. Q4 2021 hedge fund letters, conferences and more The fund's short Read More

It is also critical for private equity firms to set the regulatory tone from the top. This means putting in place a chief compliance officer who takes the role seriously and is not simply in the position by default. This person should be well versed in all the rules and regulations impacting PE and must have the power to ensure the firm is doing (and documenting) exactly what it says it is doing.

A culture of compliance will be crucial in 2016. Private equity firms have spent years and years building their reputation by delivering solid returns to their investors. To have that taken away overnight because of a compliance breach—that would be devastating. It is one thing to hire smart and honest people, but it is quite another to have a tone and culture of compliance throughout the organization.

In this video, Jay Levy and Chris Aroh, partners in CohnReznick’s Financial Services Industry Practice discuss regulatory vulnerabilities in private equity and what firms can do to build a strong compliance program. Watch the video below.

Identifying Regulatory Vulnerabilities In Private Equity

This article represents the views of the author only and does not necessarily represent the views of PitchBook.

Updated on

Sheeraz is our COO (Chief - Operations), his primary duty is curating and editing of ValueWalk. He is main reason behind the rapid growth of the business. Sheeraz previously ran a taxation firm. He is an expert in technology, he has over 5.5 years of design, development and roll-out experience for SEO and SEM. - Email: sraza(at)valuewalk.com
Previous article What Will Gamers Demand From The Xbox Two?
Next article New Leaks Suggest Slimmer, Waterproof iPhone 7

No posts to display