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    Sep. 25, 2025

Compliance Corner Q4‑2025: Regulatory Filings and Other Considerations Hedge Fund Managers Should Note in the Coming Quarter

The final quarter of the calendar year is a busy time for hedge fund managers. They may be arranging for Custody Rule audits, conducting annual compliance reviews, making required regulatory filings, handling year-end redemptions, making various tax elections, calculating fund expenses and conducting employee performance reviews. Thus, it is never too soon to start planning for the tasks that lie ahead in the next few months. This latest installment of the Hedge Fund Law Report’s quarterly compliance update highlights upcoming filing deadlines and reporting requirements fund managers should be aware of during the fourth quarter of 2025. This guest article by ACA Group consultants Grazia Gatti, Luis Garcia and Dan Campbell also includes information on the SEC’s and the CFTC’s Spring 2025 Regulatory Agendas – their so-called “Reg Flex” agendas – the creation of an Artificial Intelligence Task Force within the SEC and the SEC’s new statistics and data visualizations webpage. For more from ACA Group, see “ACA Compliance Testing Survey: AI and AML Are Now Top Compliance Concerns” (Aug. 28, 2025).

SEC Penalizes Two CCOs Who Doctored Advisers’ Compliance Records

The old adage, “The cover up is worse than the crime,” comes to mind in two SEC settled enforcement proceedings against CCOs who provided SEC examiners with backdated documents. In the more egregious of the two matters, the CCO of an investment adviser allegedly fabricated and modified preclearance forms for personal trades, including by signing a portfolio manager’s name to the forms, and then failed to be forthright with SEC examiners when asked about the forms. In the other, another investment adviser CCO allegedly created and backdated checklists evidencing the adviser’s annual compliance reviews. This article discusses the enforcement proceedings, with lessons for CCOs from Robert W. Pommer III and Nathan R. Schuur, partners at Proskauer. See “SEC Sanctions Investment Adviser and CCO for Compliance Failures That Allowed Misappropriations” (Jul. 17, 2025).

U.K. Regulators Propose Changes to AIFM Rules to Ease Compliance Burden on Fund Managers

The U.K.’s Financial Conduct Authority (FCA) and His Majesty’s Treasury (HMT) have undertaken far-reaching and overlapping initiatives with a view to improving the U.K.’s private funds regime while simultaneously reforming or abolishing vestiges of the E.U.’s Alternative Investment Fund Managers Directive following Brexit. On April 7, 2025, HMT issued its consultation “Regulations for Alternative Investment Fund Managers” (Consultation), and the FCA simultaneously released its “Call for Input: Future regulation of alternative fund managers” (Call for Input). The Consultation focuses on the framework of revising regulations and the relative merits of simplifying the current regulatory framework for alternative investment fund managers (AIFMs) and depositaries, while the Call for Input sets out the FCA’s proposed approach to regulating AIFMs within the revised framework. The comment period for both proposals closed on June 9, 2025. The FCA stated that it plans to consult on detailed rules in the first half of 2026, subject to feedback and decisions by HMT on the future regime. This article summarizes aspects of the proposed regulatory initiatives most relevant for fund managers and presents commentary from lawyers interviewed by the Hedge Fund Law Report. For more from the FCA, see “FCA’s Final Rules on Sustainability Disclosure Requirements and Investment Labels” (Feb. 29, 2024).

Established Manager Report Benchmarks New Funds’ Strategies, Fees and Redemption Provisions

Seward & Kissel’s third annual survey of established hedge fund managers, which covers fund launches during 2024, examined managers’ strategy preferences; management fees and performance allocations; redemption rights; and fund structures. As in prior years, the study included only fund managers with at least $1 billion in regulatory assets under management that have been in business for at least five years. This article examines the key findings of Seward & Kissel’s 2025 survey report, with additional commentary from Seward & Kissel partners Nicholas R. Miller and Steven Nadel. See “Established Hedge Fund Manager Study Examines Strategies, Fees, Liquidity and Structures” (Nov. 21, 2024).

The Potential Impact of Proposed Amendments to FINRA’s Rule 2210 on Performance Projections

During its June 4-5, 2025, meeting, FINRA’s Board of Governors approved a rule proposal that would amend Rule 2210 (Rule) regarding communications with the public. The amendments aim to provide an exemption to the prohibition that has kept broker-dealers from making performance projections in written communications with investors. Such a change aims, in theory, to lessen a misalignment between current FINRA regulations and the SEC’s Marketing Rule. Although broker-dealers may welcome the amendments, their potential impact is somewhat limited, legal experts told the Hedge Fund Law Report. They apply more to the institutional side of the market – well-heeled qualified purchasers – than to accredited investors and may not swing the pendulum far in favor of the “retailization” that SEC Chair Paul S. Atkins and others have called for publicly. This article explores why the Rule in its current form has been a source of frustration for many registered entities, explains how the proposed amendments would alter the Rule and discusses what those changes would mean in practice, with commentary from legal and accounting experts. For discussion of a prior proposal to revise the Rule, see “FINRA Proposes to Permit Use of Performance Projections and Target Returns in Marketing” (Jan. 18, 2024).

Former SEC Counsel Joins Katten

Michael S. Didiuk has joined Katten’s New York office as a partner in the financial markets and funds department. Didiuk advises investment advisers, private funds and registered funds on all aspects of their business, including structure; governance; compliance obligations under the federal securities laws; registered and private products; SEC examinations and investigations; and strategic transactions. For insights from another Katten partner, see “Implications of New Dealer Definition for Hedge Funds (Part Two of Two)” (May 9, 2024).

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