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Outsource fund administration to meet regulatory requirements

Regulators are increasingly focusing on private equity and real estate fund managers. Among the priorities of the SEC for the current examination year are Expense Allocations, Asset Valuation, Cybersecurity, and Anti-Money Laundering.

Former Director of the SEC’s Office of Compliance Examinations and Investigations, Andrew J. Bowden, described what he called a “remarkable level of lawbreaking and cheating” among the 150 private equity advisory firms inspected so far in the SEC’s presence exams.

Since many institutions are required to only invest with regulated investment managers, with increased institutional capital comes regulatory oversight that had not been prevalent in the real estate fund industry until recently.

Fund managers can be forced to register as investment advisers with as little as $25M of third-party money under certain circumstances, which significantly increases the operational burden on the manager’s firm.

Outsourcing fund administration to an independent fund administrator can help meet these needs. An outsourced solution expands a fund’s back-office functionality, enabling funds to meet regulatory and investor reporting requirements and streamline accounting functions at scale.

A dedicated service platform can ease the operating burden on fund managers and allow the manager’s professional staff to focus on the investment portfolio and securing new investors.

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