We recently peered into our crystal ball to divine the SEC’s 2013 enforcement priorities for advisers to private funds (i.e., hedge funds and private equity funds), but came up empty. Instead, we looked at the SEC’s public statements and prior enforcement actions, which reveal four areas of enforcement risk for private fund advisers. First, the SEC will focus on potential conflicts of interest, particularly conflicts involving fees, compensation, and allocation of investment opportunities. Second, advisers must ensure that they always provide accurate information to investors, including in any advertisements or statements about fund performance. Third, the SEC will continue to assure that advisers have taken steps to appropriately value and safeguard assets. Finally, SEC inquiries may be driven by the fraud du jour – for the foreseeable future the FCPA, insider trading, and AML. In addition to mitigating potential liability, firms that comprehensively address these enforcement risks in advance may find themselves with a distinct competitive advantage over their peers. Read more about these risks, and some steps that advisers can take to address them, in this article starting on page 2 of the .pdf located here.