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    Mar. 5, 2026

Converting a Private Fund Into a Regulatory Fund: Trend, Drivers and Time Frame (Part One of Two)

In constant pursuit of fundraising opportunities, some fund managers are seeking broader exposure to retail capital by converting their private funds that operate under the Investment Advisers Act of 1940 into funds registered under the Investment Company Act of 1940. Although such a conversion can substantially expand investor access to the vehicle, it also introduces a panoply of complications and requirements, including numerous tax issues, investor approval challenges and tedious regulatory filings. This first article in a two-part series examines the common rationales that compel advisers to convert their private funds into registered funds, and considers various factors that can influence the timeline for effectuating a conversion. The second article will explore best practices for handling certain challenges of fund conversions, including obtaining investor approvals, ensuring compliant portability of track record, putting a fund-level board of directors in place and retaining qualified third-party service providers. See “Retailization Season Is Heating Up: A Private Fund Manager’s Guide to Structuring, Procedures and Fundraising” (Jun. 12, 2025).

After Retail Gets Access to Alts, Then What?

Two statements posted on the SEC’s website in rapid succession jointly offer an important message about the agency’s approach to making PE and other alternative investments available to retail investors. On November 18, 2026, the SEC Division of Examinations issued its 2026 examination priorities, which listed several priorities in SEC examinations relating to alternative retail products, with a particular focus on favoritism as to investment allocations and cross-trades; valuation practices; and fees and expenses. Two days later, Commissioner Mark Uyeda gave a speech discussing the unique role the products can play in retail accounts and how regulators can work together to remove obstacles. Reading between the lines of the SEC’s two messages, the agency appears to be encouraging investment advisers who historically have served private markets to expand their offerings to retail customers. At the same time, however, the Commission is also signaling that it has no intention of relaxing its vigilant approach to protecting those investors. As the SEC is already looking past facilitating retail access to how it will police retail alternative products once they are widely available, this guest article from Skadden partners Daniel Michael and Andrea Griswold looks beyond current obstacles to public markets and explores several ways issuers can manage downstream regulatory risks in three key areas: disclosures, sales practices and valuations. See “SEC 2026 Examination Priorities Highlight Classic Compliance Issues, Retailization Efforts and AI Oversight” (Jan. 8, 2026).

OFAC Sanctions PE Firm for Indirect Dealings With Investor in Violation of Russia Sanctions

The sanctions regime administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) can pose significant risks for PE firms, including when sanctions are imposed on an existing investor. In 2018, a PE firm secured a $50‑million capital commitment from an entity affiliated with a Russian billionaire, whom OFAC subsequently placed on its Specially Designated Nationals and Blocked Persons list. After conducting due diligence and seeking the advice of counsel, the firm determined that the sanctioned individual did not have an interest in the investor entity. Subsequently, OFAC alleged that the sanctioned individual indirectly controlled the entity, and that, as a result, the firm had dealt in that individual’s property interests in violation of U.S. sanctions. In December 2025, the firm agreed to pay nearly $11.5 million to settle the matter, according to OFAC’s enforcement release (Release). This article parses the Release, with commentary from Lowenstein Sandler counsel Abbey E. Baker and MoloLamken partner Walter H. Hawes IV. See our three-part series on sanctions: “How Sanctions Regimes Work” (Sep. 13, 2022); “Their Impact on Private Fund Investors and Investments” (Sep. 20, 2022); and “How to Comply With Them” (Sep. 27, 2022).

How to Manage Conflicts of Interest to Meet U.K. FCA Expectations

In December 2025, the U.K. Financial Conduct Authority (FCA) requested feedback on proposals to amend the rules on client categorization and conflicts of interest. With conflicts of interest under the FCA’s microscope, ACA Group (ACA) hosted a webinar to provide firms with guidance on how to manage conflicts and comply with regulatory requirements. Moderated by ACA managing director Charlotte Longman, the panel featured ACA director Michael Strug and Simmons & Simmons partner James Wallace. This article summarizes the key takeaways from the program. For coverage of previous ACA programs, see “Strategies U.K. Fund Managers Can Take to Prepare for an FCA Investigation” (Mar. 20, 2025); and “Performance Advertising Trends, Requirements and Guidance for Private Credit Strategies” (Oct. 2, 2025).

Marketing Rule Risk Alert Focuses on Testimonials, Endorsements and Third‑Party Ratings

In May 2021, the SEC adopted Rule 206(4)‑1 (Rule) under the Investment Advisers Act of 1940. Since then, the Division of Examinations (Division) has issued multiple risk alerts on Rule-related examinations and compliance expectations. The SEC has also resolved multiple enforcement proceedings for alleged violations of the Rule and associated compliance failures. The Division’s fourth risk alert (Risk Alert), released on December 16, 2025, is based on the staff’s review of advertisements disseminated to investment advisers’ current or prospective clients, including private fund investors, that included testimonials, endorsements and/or third-party ratings. Just weeks after the Division issued the Risk Alert, the Division of Investment Management issued two new FAQs regarding the Rule. This article discusses the relevant provisions of the Rule, the deficiencies identified in the Risk Alert and the two new FAQs. See “New Marketing Rule FAQs Offer Safe Harbors for Using Extracted Performance and Certain Metrics” (May 1, 2025).

WilmerHale Welcomes Back Javad Mostofizadeh As a Partner in San Francisco

Javad Mostofizadeh has rejoined WilmerHale as a partner in its corporate practice in San Francisco. He focuses on advising venture capital, growth equity and PE funds on a wide range of investment management matters, from fund formation and structuring to ongoing operations and investor relations. For insights from WilmerHale, see “Inadequate MNPI Policies Cost CLO and Private Fund Adviser $1.8 Million” (Jan. 9, 2025); and “Electronic Communications, Cooperation Standards and Other Emerging Trends in the SEC’s Oversight of Private Funds” (Jan. 12, 2023).

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