On August 23rd, The Securities and Exchange Commission (SEC) has adopted new rules and rule amendments to enhance the regulation of private fund advisers and update the compliance rule for all investment advisers. The main objective of these rules is to safeguard private fund investors by increasing transparency, competition, and efficiency in the private funds market. To enhance transparency, private fund advisers registered with the Commission will be required to provide investors with quarterly statements that include detailed information on fund fees, expenses, and performance. Additionally, these advisers must obtain and distribute annual financial statement audits for each private fund they advise. In certain cases, such as adviser-led secondary transactions, fairness or valuation opinions must also be provided. To better protect investors, the rules prohibit private fund advisers from providing preferential treatment regarding redemptions and information if it negatively impacts other investors. However, a disclosure-based exception is allowed in other cases of preferential treatment, with a requirement to provide specified disclosure on preferential terms to all current and prospective investors. The rules also restrict certain activities by private fund advisers that are contrary to the public interest and investor protection. Advisers can engage in restricted activities as long as they provide appropriate specified disclosure and, in some cases, obtain investor consent. However, the rules do not permit advisers to charge or allocate certain investigation costs to the private fund in cases where there is a violation of the Investment Advisers Act of 1940 or its rules. To avoid the need for renegotiating governing agreements for existing funds, the SEC has adopted legacy status provisions for certain restricted activities and preferential treatment provisions. These provisions apply to written governing agreements entered into before the compliance date and to funds that have already commenced operations by the compliance date. These new rules and amendments by the SEC aim to enhance transparency, protect investors, and restrict activities that are not in the public interest. By doing so, they seek to create a fair and transparent environment for private fund investors.