SEC's Office of Compliance Inspections and Examinations Issues Risk Alert on Alternative Investment Due Diligence Practices

May 01, 2014

The SEC’s Office of Compliance Inspections and Examinations (OCIE) recently published a Risk Alert summarizing the OCIE Staff’s observations regarding the due diligence practices of certain SEC-registered investment advisers that invested in or recommended private alternative investment funds, such as hedge funds, private equity funds or funds of private funds, to their clients. The OCIE Staff examined the due diligence and related investment advisory practices of such advisers in order to evaluate how these advisers: (i) performed due diligence of alternative investments and their respective managers; (ii) identified, disclosed, and mitigated potential conflicts of interest; and (iii) evaluated alternative investments and fund structures.

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