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    Nov. 6, 2025

SEC Eases Some Requirements for Registered Closed-End Funds Investing in Private Funds

On August 15, 2025, the SEC released Accounting and Disclosure Information 2025‑16 (ADI), setting forth changes in the agency’s longstanding position on restrictions and requirements applicable to registered closed-end funds that invest in private funds (CE‑FOPFs). For more than two decades, CE‑FOPFs that invest more than 15% of their assets in private funds have been required to market and sell only to accredited investors, as defined in Regulation D under the Securities Act of 1933 (Securities Act), who make minimum initial investments of $25,000. But now, noting broad changes in market practices, oversight and regulation since the first CE‑FOPF registration statement in 2002, the SEC has stated that, in its review of new registration statements for such vehicles, the agency will no longer provide comments requiring CE‑FOPFs to either maintain such stringent investor thresholds or limit their investments to 15% of their assets. At first glance, the ADI may sound like a pivot away from the arbitrary exclusion of retail investors and a step forward in the ongoing trend of “retailization” that some SEC officials have publicly endorsed. But although the ADI is welcome, legal experts interviewed by the Hedge Fund Law Report are divided on its practical significance for private fund managers, especially because it does not constitute formal rulemaking. This article summarizes the ADI and offers legal analysis and key takeaways for fund managers from private funds attorneys. See our two-part series on the retailization of private funds: “Incremental Changes Signal SEC Support” (Aug. 14, 2025); and “Practical Consequences” (Aug. 28, 2025).

Navigating Performance Advertising Challenges Under the Marketing Rule and GIPS

The Marketing Rule, Rule 206(4)‑1 under the Investment Advisers Act of 1940, defines “advertisement” broadly and “captures just about any use of investment performance in promotional communications,” explained Dechert partner Michael W. McGrath at a CFA Institute presentation on the interplay of the Marketing Rule with the Global Investment Performance Standards (GIPS®), which is a voluntary framework for calculating and presenting investment performance to facilitate comparability. An SEC-registered adviser that claims compliance with GIPS must comply with both GIPS and the Marketing Rule. McGrath, along with Dechert partner Robert S. Shapiro and associate Lindsay R. Grossman, discussed SEC staff FAQs on extracted performance and portfolio characteristics; issues in calculating net performance; and areas where the Marketing Rule and GIPS diverge. Ken Robinson, director of Global Industry Standards at CFA Institute, moderated the discussion. This article synthesizes their insights. See “Performance Advertising Is a Significant Pain Point Under the Marketing Rule” (Oct. 24, 2024); and “CFA Institute/IAA Survey Highlights Marketing Rule Compliance Practices” (Aug. 29, 2024).

CCO Hiring Process: Compensation Ranges and Key Attributes for the Role (Part One of Two)

As the SEC continues to focus on private funds and regulatory requirements proliferate, fund managers are attributing more value and importance to their respective compliance programs. Accordingly, demand for qualified CCO candidates has never been higher as managers scramble to fill the role or upgrade their existing compliance teams. There is a constantly evolving standard, however, as to the types of skills, experience and traits an individual needs to thrive as a CCO, as well as the amount of compensation managers need to offer to secure their services. This first article in a two-part series discusses current drivers and trends in the CCO market; the experience, skills and attributes firms are looking for in candidates; and the typical compensation ranges for CCOs based on a firm’s size and sophistication. The second article will examine the timeline for filling the CCO role, key stakeholders involved in the interview process and an array of sample questions that firms use to vet which candidate is best suited for the role. See “Skills and Qualities of Effective Compliance Officers” (Jul. 17, 2025).

Benchmarking Fund Managers’ Adoption and Governance of Generative AI

Artificial intelligence (AI) – and generative AI (Gen AI) in particular – is being incorporated at an unprecedented rate into virtually all areas of the economy. Thus, it is not surprising that virtually all fund managers who participated in a study conducted by the Alternative Investment Management Association (AIMA) said they use Gen AI in their work – and most are increasing their use. Earlier this year, AIMA asked fund managers about their uptake of Gen AI, including their approaches to governance; policies and procedures; risks and limitations of Gen AI; training and hiring; Gen AI models; and use cases. It also asked institutional investors about their AI-related concerns and communications with fund managers. This article distills the key takeaways from AIMA’s study. See “AI Widely Used by Hedge Funds, AIMA Study Finds” (Apr. 25, 2024).

SEC Claims Hedge Fund Adviser and Principals Concealed More Than $350 Million in Losses

The SEC has charged a hedge fund adviser, its founder and a subadviser in a multi-year scheme to conceal more than $350 million in trading losses. The adviser purportedly allocated its funds’ assets among multiple, diverse subadvisers that were required to post “cash collateral” to cover trading losses. In practice, however, they concentrated their assets with one subadviser. At the heart of the scheme were multiple “round-trip” transactions with the subadviser and his affiliates designed to conceal losses and make it appear that he maintained the requisite collateral balances. Additionally, contrary to the adviser’s representations to investors, the subadviser was permitted to post non-cash collateral, much of which was worthless. This article discusses the related enforcement actions. See “SEC Charges Georgia Hedge Fund Adviser With Defrauding Investors” (Aug. 29, 2024).

Fried Frank Adds Partner Duo to New York Office

The New York office of Fried Frank has two new additions. Allison C. Yacker has joined the firm as a partner in its asset management practice and represents a wide range of fund managers and investors in transactional, fund formation, regulatory and corporate matters. Vadim Novik, who also joins as a partner, brings his more than a decade of tax law experience in the financial industry to the firm and supports its asset management practice, including through guiding hedge fund clients on structured trades and similar tax-driven strategies. For insights from Yacker, see “Hedge Funds As Shadow Banks: Tax Considerations for Hedge Funds Pursuing Direct Lending Strategies (Part One of Three)” (Sep. 22, 2016); and “Hedge Funds As Direct Lenders: Regulatory Considerations of Direct Lending and a Review of Fund Investment Terms (Part Three of Three)” (Oct. 6, 2016).

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Women to Watch: Contributions, Achievements and Observations of Outstanding Female Professionals

To mark International Women’s Day, women editors and reporters at ION Analytics interviewed outstanding women in the industries and jurisdictions we cover. In this part, Law Report Group editors Jill Abitbol, Robin L. Barton and Megan Zwiebel profile notable women in data privacy, cybersecurity, private funds and anti-corruption law, including Anne-Gabrielle Haie, Jessica Lee, Micaela McMurrough, Laura Perkins, Amanda Raad, Madelyn Calabrese, Ranah Esmaili and Genna Garver. Enjoy reading their inspiring remarks here.