7g. PF - Preferential Treatment:  Side Letters and Other Issues (Intermediate - CLOSED)

SEC Rule 211(h)(2)-3 substantially restricts the ability of private funds to grant certain investors in those funds (or investors in similar pools of assets) better terms than those granted to other investors.  The new rule also curbs a Private Fund's ability to grant preferential redemption or transparency to certain investors unless they offer it to all investors.  Finally, the rule requires that if the Private Fund grants any preferential treatment to one investor, it must disclose this to all investors.  This session will focus on the implications of these requirements in the context of common historical practices that afforded some investors greater rights than other investors.  It also will focus on how hedge funds and private equity managers are considering implementation of these requirements and potential associated compliance procedures. 

This session is closed to both regulators and members of the press.

Learning Objectives:

  • Identify common practices that may need to be reexamined in light of the newly effective rule, including informal communications with investors.

  • Consider the analysis required to determine whether preferential rights create a "material negative effect.”

  • Analyze potential policies and procedures facilitating compliance.

  • Discuss considerations for compliance by peer managers and investors.


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7f. IA/PF – Global Compliance and Marketing (Intermediate - OPEN)

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7h. ALL - Technology Challenges Talk Group (CLOSED)