Andrew J. Bowden, Director of the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) once again in a recent speech to industry representatives, described various areas of concern found by OCIE examiners during examinations of private equity advisers.

Those areas of concern include: (i) the use of confusing and/or incomplete limited partnership or limited liability company agreements regarding investor rights, (ii) valuation policies of the private fund assets are not fully explained within either the organizational documents or the private placement offering materials, and (iii) fees and expenses are not fully disclosed or are vague and open to interpretation. In addition, the OCIE has noted concerns when the general partner or manager of the fund has been found to have collected reimbursement for expenses from the fund when it should have paid for such expenses out of its own pocket.

Through his public announcements about the compliance concerns found by OCIE’s examiners, Mr. Bowden, in effect, serves as a warning to registrants that they should be addressing the type of concerns described by Mr. Bowden before the arrival of the OCIE examiners and possible enforcement action if such concerns are found to be present