SEC official: Don’t be afraid to ask questions

Private fund managers shouldn’t fear being targeted for exams simply by asking regulators for more guidance, the SEC’s Marc Wyatt said during an industry conference last week. 

Speaking at an industry event in Washington DC, the US Securities and Exchange Commission’s Marc Wyatt encouraged private equity managers to engage regulators about their obligations as registered investment advisers.

“He was very emphatic that the industry maintains a healthy dialogue with the commission,” said Duane Morris private equity co-head Richard Jaffe, who last week interviewed Wyatt at a public policy summit hosted by the Association for Corporate Growth (ACG), an advocacy group for mid-market companies and professionals.

Wyatt, who became deputy of the agency’s Office of Compliance Inspections and Examinations (OCIE) in October, made a distinction between inspectors and enforcement personnel during the conference, said Jaffe in an interview with pfm.

“His point was that registered advisers should feel comfortable requesting more guidance and clarity, or even provide the commission with negative feedback, without concern that any remarks would lead them to being targeted for an exam,” said Jaffe.

During the conference Jaffe pressed Wyatt on a lack of consistency across SEC regional offices with respect to the inspections process. For instance, different advisers have received conflicting answers with respect to naming portfolio companies on their websites and whether doing so violated any rules on general solicitation.

According to Jaffe, Wyatt stressed the need for harmonization across offices during the on-stage interview but was reluctant to say the SEC would offer formal guidance on less material matters.

“It seems the SEC doesn’t want to provide a set of best practices,” said Jaffe. “They would prefer to let the industry evolve on its own, and signal their acceptance of certain practices by not mentioning them in a deficiency letter for instance.”

Over the past year the ACG has been recruiting private equity CFOs, CCOs and in-house general counsel members to create a regulatory taskforce willing to regularly speak with SEC officials about industry matters. 

The group, named the Private Equity Regulatory Taskforce (or PERT), held its inaugural meeting in October to discuss a spate of new regulations, some of which they feel have resulted in unnecessary compliance costs. Over 20 private equity professionals attended the meeting in person at The Riverside Company’s New York office in Manhattan, with another 45 of their industry peers joining via conference call.

The task force, which is planning to create a list of best practice principles in line with what the Institutional Limited Partners Association created for private equity LPs, includes as co-chairs: Josh Cherry-Seto, CFO at Blue Wolf Capital Partners; David Gershman, general counsel at Trivest Partners; April Evans, CFO and CCO at Monitor Clipper Partners; Julianne Lis-Milam, general counsel at Hammond, Kennedy, Whitney & Company; Bela Schwartz, CFO at The Riverside Company; Gretchen Perkins, a partner at Huron Capital Partners and ACG public policy committee co-chair; JB Dollison, a managing director at Crutchfield Capital Corporation and ACG public policy committee co-chair; and Duane Morris’ Jaffe, who is also incoming vice chairman of ACG Global.

The PERT held its second meeting in December and plans to hold a third meeting sometime this month. For more information, contact Amber Landis, senior director of ACG, at