In the Press
December 15, 2022

Concerns, Criticisms and Critiques of the Practical Impact of the SEC’s Proposed Rules for Overseeing Service Providers (Private Equity Law Report)

When the SEC proposed new rules to mandate certain diligence, monitoring and record keeping practices as to specified service providers, it purported to be operating under the auspices of protecting investors and mitigating systemic risk. Multiple experts interviewed by the Private Equity Law Report questioned whether the requirements in the proposal are necessary or additive relative to existing industry practices. Most fund managers – and particularly PE sponsors – developed their robust policies and procedures for monitoring and overseeing service providers in response to the SEC’s focus on arm’s-length negotiations with affiliated entities, noted Financial Industry and Private Investment Funds partner Brynn Peltz. “The SEC made it clear that, as a fiduciary, a fund manager needs to ensure every service provider it picks is in the best interest of its funds and to periodically verify each provider is fulfilling those standards,” she explained.