by Robin M. Bergen, Elizabeth Lenas, Amber V. Phillips, and Anna Bintinger
From left to right: Robin M. Bergen, Elizabeth Lenas, Amber V. Phillips, and Anna Bintinger (Photos courtesy of Cleary Gottlieb Steen & Hamilton LLP)
The U.S. Securities and Exchange Commission (“SEC”) Division of Examinations (the “Division”) released its 2024 examination priorities on October 16, 2023 (the “2024 Priorities”), launching a new release schedule to align with the fiscal year. As in the 2023 examination priorities (the “2023 Priorities”), private fund advisers received special focus, with broad topic areas spanning both the existing Staff sweeps on custody, marketing and artificial intelligence, as well as renewed scrutiny of valuations and investment processes. Despite its release causing much fanfare, there was surprisingly little overlap between the 2024 Priorities and the newly adopted Private Fund Adviser Rules; the focus on fees and expense allocation carried over from the Private Fund Adviser Rules, and the Division picks up a theme from its adopting release by taking a shot at limited partnership advisory committees (“LPACs”) and compliance with private fund governance procedures.
The 2024 Priorities address private funds; standards of conduct (particularly fiduciary duties and conflicts of interest); information security and operational resiliency; emerging technologies and crypto; regulation systems compliance and integrity; broker dealers and exchanges; anti‑money laundering; oversight of the Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board programs and policies; and oversight of municipal advisers, security-based swap dealers and transfer agents.