The second article in a three-part series addressing the US Securities and Exchange Commission’s (SEC’s) proposed rules for the private funds space provides general observations and explains the types of funds impacted by the proposal, covering what it says about the SEC’s view of the private funds space.
In speaking with Private Equity Law Report, partner Christine Lombardo viewed the SEC’s reliance on selected enforcement actions with skepticism. “The SEC cited a number of enforcement actions in [the Proposal]. It struck me that all of those cases were disclosure cases – the SEC didn’t claim the practices themselves were fraudulent, as I recall, but rather that the disclosure was inaccurate, inadequate or differed from the practice,” she said.
“With appropriate disclosure, investors should be able to make an informed decision and consent to the practice. But, it seems that the SEC thinks that it needs to go one step further and just prohibit certain activities it views as contrary to investor protection.”
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