The New York State Insurance Fund (NYSIF) has sent a letter to the Securities and Exchange Commission (SEC) in support of the SEC’s proposal to strengthen private funds regulation, including private equity, venture capital, and hedge funds.
The New York State Insurance Fund (NYSIF) has sent a letter to the Securities and Exchange Commission (SEC) in support of the SEC’s proposal to strengthen private funds regulation, including private equity, venture capital, and hedge funds.
If adopted, the proposal would require private fund advisers to provide investors greater transparency into fees, expenses, and fund performance and prohibit them from engaging in certain activities that harm investors.
Private funds control approximately $18 trillion in gross assets under management, with private equity assets alone doubling in size in less than five years. The growth is driven, in part, by institutional investors, such as state and local pension funds, university endowments, foundations, and nonprofits. With such investments expanding, private funds will continue to play an increasingly important role in the everyday lives of New Yorkers, whether they are saving for retirement or funding college, and touch every aspect of the real economy.
However, as detailed in NYSIF’s letter, some investors are at a severe competitive disadvantage. To gain entry to a fund, they often must accept one-sided contractual provisions, such as those requiring investors to waive adviser fiduciary duty or pay fees for unperformed services. Investors also must contend with a lack of consistent, standardised, and reliable information on the total cost of their investment and fund performance and navigate an opaque process of entering into bespoke “side letters” with undisclosed preferential terms for select investors.
