Finishing Strong and Looking Ahead

As the end of 2024 approaches, it is crucial that all investment advisers—including registered investment advisers (RIAs) and exempt reporting advisers (ERAs)—complete end of the year regulatory and compliance tasks and prepare for various reporting deadlines looming in early 2025. This is an opportune time to review, test, and update compliance programs, conduct annual reviews and employee trainings, and address any outstanding regulatory issues. To help you close out 2024 strong and prepare for 2025, we have provided the below checklist, which identifies notable year-end compliance tasks, and the below chart, which summarizes key regulatory filing deadlines in the first quarter of 2025.

2024 End-of-Year Checklist:

• Compile a calendar with key dates and events in 2025. The 2025 calendar should address: (1) required regulatory filings; (2) contractual notices and reporting deadlines; (3) meetings of relevant adviser and private fund committees (e.g., LPAC meetings); (4) compliance trainings; (5) an annual review of the adviser’s compliance policies and procedures; and (6) other periodic tasks required under the adviser’s compliance program.
• Prepare for regulatory filings in the first quarter of 2025. Collect and organize information for required regulatory filings, which can be burdensome and time-consuming, especially to address recent changes to any relevant forms (e.g., Form PF).[1]
• Conduct an annual review of the adviser’s written compliance policies and procedures. Rule 206(4)-7(b) under the Investment Advisers Act of 1940 (the “Advisers Act”) requires RIAs[2] to annually review the adequacy and effectiveness of their written compliance policies and procedures.[3] In connection with this review, an investment adviser should consider taking the following measures:
• Ensure that the policies and procedures reflect current law and regulations. Investment advisers should also be mindful of upcoming changes to applicable laws and regulations and the relevant compliance dates, for example: (1) the U.S. Department of the Treasury’s Financial Crimes Enforcement Network’s (“FinCEN”) expansion of the AML/CFT rules to investment advisers;[4] (2) the SEC’s amendments to Regulation S-P;[5] (3) California’s diversity reporting law for venture capital firms;[6] and (4) potential beneficial ownership information (BOI) reporting obligations with FinCEN under the Corporate Transparency Act (CTA);[7]
• Review the SEC’s 2025 Examination Priorities,[8] recent risk alerts, and recent enforcement actions,[9] and consider whether the adviser’s existing compliance policies and procedures adequately address emerging compliance risks and SEC focus areas;
• Consider whether changes to the investment adviser’s business in the prior year (e.g., new products, services, and investment vehicles, the incorporation of new tools, such as artificial intelligence, or changes to the client base) should prompt updates to the compliance program; and
• Determine whether the investment adviser has resolved all findings and action items from prior compliance reviews.
• Conduct annual compliance training for supervised persons. In most cases, the investment adviser’s policies and procedures will contemplate an annual compliance training for employees. Even if not, doing so is considered best practice to ensure that employees are properly trained on the firm’s current compliance policies and procedures and any changes in applicable law.
• Perform any internal reporting, due diligence, testing, and other tasks required by the firm’s compliance policies and procedures. Advisers Act rules and/or the investment adviser’s compliance policies and procedures may require the CCO or others to perform various tasks on an annual or other basis, including taking the following measures:
• Obtain and review annual personal securities holdings reports and quarterly transaction reports from “access persons” pursuant to Rule 204A-1 under the Advisers Act and the investment adviser’s Code of Ethics;
• Collect any required acknowledgments or certifications from supervised persons regarding the adviser’s compliance manual or specific policies and procedures (e.g., electronic communications);
• Assess disqualification status for any solicitor or placement agent pursuant to Rule 206(4)-1 under the Advisers Act and ensure such agreements have been updated to reflect required disclosures by the investment adviser or the placement agent under the Rule;
• Collect any required internal reporting, including for supervised persons’ outside business activities, gifts and entertainment, and political contributions;
• Test certain policies and procedures, such as the adviser’s business continuity plan, or the investment adviser’s information security systems (e.g., penetration testing and vulnerability assessments); and
• Conduct ongoing due diligence of service providers.
• Review side letters with any private fund limited partners to confirm compliance with any reporting requirements.
• Confirm all LPAC and other committee meeting minutes are documented and communicate meeting schedules for 2025.
• Consider conducting a mock audit of the investment adviser’s compliance program. Identifying and correcting deficiencies and other areas of weakness before they are discovered during an SEC exam can help mitigate the risk of an SEC deficiency letter or enforcement action.

Important Q1 2025 Regulatory Filing Deadlines

[1] The SEC adopted amendments to Form PF on February 8, 2024, marking the third set of amendments to the form in 12 months. See Form PF; Reporting Requirements for All Filers and Large Hedge Fund Advisers, SEC Rel. No. IA-6546 (Feb. 8, 2024). Any Form PF filing made on or after March 12, 2025 is required to be filed on the amended version of Form PF.

[2] Although ERAs are not subject to Rule 206(4)-7 under the Advisers Act, as a best practice, they should consider conducting an annual review and update of their compliance program.

[3] Rule 206(4)-7 does not explicitly require investment advisers to document their annual review in writing. Nevertheless, the SEC staff generally expects investment advisers to maintain some records as evidence that they conducted an annual review of their policies and procedures.

[4] See MoFo’s Client Alert on FinCEN’s AML/CFT rulemaking for investment advisers. The compliance date for the amended rule is January 1, 2026.

[5] See MoFo’s Client Alert on Regulation S-P Amendments. The compliance date for these amendments to Regulation S-P is December 3, 2025 or June 3, 2026, depending on the adviser’s size.

[6] See MoFo’s Client Alert regarding recent amendments to California’s Diversity Reporting law. The compliance date for the amended law is March 1, 2026.

[7] Although the CTA took effect on January 1, 2024, enforcement of the CTA and the BOI reporting rules have been temporarily suspended by the U.S. District Court for the Eastern District Court of Texas. See MoFo’s Client Alert discussing the Court’s preliminary injunction, MoFo’s Client Alert discussing the U.S. government’s appeal, and MoFo’s CTA Resource Center.

[8] See MoFo’s Client Alert on the SEC Division of Examination’s 2025 Priorities.

[9] See MoFo’s Client Alert on Top 5 SEC Enforcement Developments for September 2024.

[10] Assumes a December 31^st fiscal year end for any filing requirements that are based on a fiscal year end.

[11] A “Large Hedge Fund Adviser” is an adviser that, collectively with its related persons, had at least $1.5 billion in hedge fund assets under management as of the last day of any month in the fiscal quarter immediately preceding the adviser’s most recently completed fiscal quarter.

[12] These events include: (1) certain extraordinary investment losses; (2) significant margin events; (3) counterparty default events; (4) material changes in prime broker relationships; (5) operations events (including certain investment, compliance, and valuation issues); (6) certain events associated with withdrawals; and (7) the inability of a fund to satisfy redemptions, or suspensions of redemptions, for more than five consecutive business days.

[13] A “qualifying hedge fund” is any hedge fund that has a net asset value (individually or in combination with any feeder funds, parallel funds, and/or dependent parallel managed accounts) of at least $500 million as of the last day of any month in the fiscal quarter immediately preceding the adviser’s most recently completed fiscal quarter.

[14] A “Large Liquidity Fund Adviser” is an adviser that advises one or more liquidity funds and had, collectively with any related persons, at least $1 billion in combined money market and liquidity fund assets under management, as of the last day of any month in the fiscal quarter immediately preceding the adviser’s most recently completed fiscal quarter.

[15] A “private equity fund” is any private fund that is not a hedge fund, liquidity fund, real estate fund, securitized asset fund, or venture capital fund and does not provide investors with redemption rights in the ordinary course.

[16] The CFTC recently amended CFTC Rule 4.7. See MoFo’s Client Alert for a summary of these amendments.s.