SEC Sweep Examination of Due Diligence processes for Alternative Investments

December 2010
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SEC Sweep Examination of Due Diligence processes for Alternative Investments

At a glance

December 2010 - In August 2010, the SEC sent notice letters to certain fund of funds announcing an examination focused on the due diligence processes employed when advisers evaluate alternative investment options.

In August 2010, the SEC sent notice letters to certain fund of funds announcing an examination focused on the due diligence processes employed when advisers evaluate alternative investment options. For purposes of the review "alternative investment" includes private equity, venture capital, fund of funds and hedge funds. The letters were sent from the SEC's Office of Compliance Inspections and Examinations in Washington, DC. The SEC staff is requesting general information (organizational information, litigation, joint ventures, Form ADV Part II, compliance policies and procedures), as well as information and processes specifically related to due diligence of alternative investments.

The SEC's letter states that examiners may wish to speak with various employees of the Adviser including, but not limited to, the Chief Compliance Officer, middle and back office personnel responsible for performing research on underlying investments, any person responsible for making decisions on the research information and the Head of the Registrant's Investment Committee.