United States

SEC auditor independence considerations for private equity funds

WHITE PAPER  | 

When a private equity fund has a registered investment adviser

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The Dodd-Frank Wall Street Reform and Consumer Protection Act requires most advisers of private funds to register with the SEC as investment advisers and to comply with the Investment Advisers Act of 1940. The U.S. Securities and Exchange Commission (SEC) requires registered advisers to maintain certain safeguards to maintain all securities at a qualified custodian. One of the safeguards required under the Act is that the registered investment adviser is subject to surprise examinations. The surprise examinations are required to be conducted by a firm that is registered with the Public Company Accounting Oversight Board and must be conducted under the independence requirements of the SEC. It is important that the registered investment adviser, private equity fund management and the management of all portfolio companies be aware of certain SEC independence considerations, which are outlined in the attached white paper.

When a private equity fund portfolio company may have an initial public offering

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If a private equity fund portfolio company is considering an initial public offering (IPO) as a possible exit strategy, SEC auditor independence rules should be considered well in advance of the IPO. It therefore is important that both private equity fund management and the management of all portfolio companies be aware of certain SEC independence considerations, which are outlined in the attached white paper.