Last week, SEC Chair Gary Gensler gave the keynote speech for the 2021 Institutional Limited Partners Association’s virtual summit. Gensler focused his remarks exclusively on private funds and detailed his view that private equity and hedge funds need more scrutiny and regulation. Careful to differentiate his statements from those of the SEC, he listed the following subjects as areas he expects will receive additional SEC focus in the near term:
Chair Gensler framed the need for these additional regulations as stemming from a concern for the importance of the key players in the private funds market – (i) institutional investors, including pension plans, foundations, and endowments, on the one side, and (ii) portfolio companies, including start-ups, small businesses, and more established commercial enterprises, on the other—all of whom he believes would benefit from greater government protection and oversight of private funds. Gensler elaborated:
“Private funds touch so much of our economy. So it is worth asking ourselves at the SEC whether we’re meeting our mission with respect to this important slice of the capital markets? Are we protecting investors? Are we facilitating capital formation? Are we maintaining fair, orderly and efficient markets in the middle?”
Chair Gensler apparently believes the answer is “needs improvement”. We note that Chair Gensler’s reference to standards for mutual funds seems instructive as to where the Commission might head during his tenure.
A transcript of Gensler’s entire speech can be found here.
If you have any questions regarding this update, please reach out to Foley’s Investment Management and Fund Formation practice.