Fund managers that are not registered broker-dealers may not think to monitor FINRA guidance. In the last paragraph of Regulatory Notice 20‑21 (Notice), however, FINRA announced that internal rates of return (IRRs) for unrealized investments sold by PE funds through FINRA members to retail investors must be calculated in accordance with CFA Institute’s Global Investment Performance Standards (GIPS). The startling expectation – noteworthy in its apparent endorsement of GIPS – did not sink in immediately. Now, close to a year after the release of the Notice, however, more fund managers are confronting demands from their broker-dealers to comply with the Notice. At least one broker-dealer has reportedly refused to include IRRs for unrealized returns in marketing materials until funds have represented their compliance. Other broker-dealers have reportedly asked funds to calculate all their IRRs – for realized as well as unrealized investments, and for both institutional and retail investors – consistent with GIPS. This first article in a two-part series describes the Notice’s requirements and which funds are subject to them; the intent and market reaction; and the possible implications of non‑compliance. The second article will discuss how broker-dealers and fund managers have responded to the Notice; how funds can prepare IRRs consistent with GIPS; and when funds should consider going the extra step of achieving firmwide GIPS compliance. See “Distorting Alpha: How Omitted Inputs and Deferred Carry Can Inflate IRR Calculations (Part One of Three)” (Sep. 10, 2019).