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For Internal Use Only 

Panel II: Private Fund 

Adviser Topics 

§ Jennifer Duggins 

§ Brendan McGlynn

§ Michael Neus 

§ Alpa Patel 

§ Adam Reback 

§ Igor Rozenblit 

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For Internal Use Only 

§ Leadership: Igor Rozenblit and Jennifer Duggins 

§ Location: SEC Regions with high concentration of private fund advisers 

§ Goals: 

1. Build examiner “pattern recognition” 

2. Use industry knowledge to conduct more thorough and 

efficient exams 

3. Understand compliance risks through analysis of industry 

dynamics 

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Private Fund Unit 
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For Internal Use Only 

Expense Shifting 

§ Senior Advisors 

§ Back Office Outsourcing 

§ Procurement Programs 

“Legacy” Risks 

Favoritism 

§ Co-investment All’cation 

§ PortCo. Lending by LPs 

§ Primary/Secondary/

Mezzanine Conflicts 

Hidden Fees 

§ Monthly Fee Accelerations 

§ Offset Issues 

§ Other PortCo Fees 

Marketing 

§ Valuation 

§ Deal Attribution 

§ Hidden Team Issues 

Private Fund Adviser Topics— 

Private Equity 

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For Internal Use Only 

Expense Shifting 

§ Front office outsourcing – Asset management spinouts 

§ Back office outsourcing – Legal, accounting 

Conflicts of Interest 

§ Affiliated property managers 

§ Relationships with property managers 

Marketing 

§ Representing internal services as being provided at or below 

market price. 

§ Disclosure regarding personnel chargebacks of affiliated 

property managers 

Real Estate Risks 

Private Fund Adviser Topics— 

Private Equity 

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For Internal Use Only 

Zombie/End of Life Issues 

§ Managing funds in liquidation without seeking extensions 

§ Fee offsets when no more management fee exists 

§ Fund Restructurings – Valuation in tenders; fiduciary duty in 

asset sales 

§ PortCo – Expense Shifting and Disclosure of Fees 

Marketing 

§ Representations made in fund extension process 

§ Performance attribution in spinouts 

§ Disclosure of net returns where management fee is paid outside 

of the fund 

Future Risks 

Private Fund Adviser Topics— 

Private Equity 

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For Internal Use Only 

Proprietary Capital/Side-by-Side Management 

§ Disclosure of proprietary/near-prop accounts 

§ Disclosure of liquidity differences between diff fund classes/prop 

accounts/SMAs 

§ Trade, Expense, Capital Allocation 

Liquidity and Valuation 

§ Potential for scope creep into illiquid securities in the 

face of draw downs 

§ Accurate liquidity assessment of semi-liquid securities 

(e.g., certain EM Bonds) 

§ Accurate valuation of side pockets in uncertain markets 

Private Fund Adviser Topics— 

Hedge Fund 

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For Internal Use Only 

Compliance 

§ Potential for weaker programs at smaller advisers 

§ Conflicts of interests at larger advisers 

§ Exclusion of compliance from research process 

§ Lack of compliance buy-in from business 

Private Fund Adviser Topics— 

Hedge Fund 

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For Internal Use Only 

Keys to CCO Success 

1. Independence, access and 

empowerment 

2. Familiarity with all aspects 

of the business è Credibility 

3. Knowledge of formation 

docs and disclosures 

4. Expert in identifying 

and curing conflicts 

Keys to Compliance 

Program Success 

1. Needs palpable buy-in from 

business 

2. Update P&P for current 

business 

3. Clear expense allocation P&P 

4. Complete, accurate and 

updated regulatory filings 

Private Fund Adviser Topics—

Compliance 

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