SECIn November 2015, the SEC announced that it had reached a settlement with Cherokee Investment Partners, LLC and Cherokee Advisers, LLC, in connection with improperly allocating managers’ regulatory expenses to three funds they managed.

Through this and similar actions, the SEC has clearly indicated the managers may assign to the funds they manage only those expenses that are specifically and expressly identified in the funds’ organizational and governing documents. A prudent approach of examining their current and past practices and reviewing existing insurance policies may limit regulatory scrutiny.

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*Reproduced with permission from VCExperts.