The SEC recently settled charges against five investment advisers to private funds for $500,000 in combined penalties, as part of its sweep for compliance with the Custody Rule.

The SEC's orders claimed that the advisers failed to comply with the Custody Rule and Form ADV. In particular, the firms failed to: have audits performed on the funds; timely deliver audited financials to investors; and ensure a qualified custodian maintained client assets. The firms also failed to make related amendments to their Forms ADV.

The SEC recently passed new rules governing advisers to private funds. Advisers should know that, even if those rules survive judicial scrutiny, the SEC may (and will) still bring actions against advisers for violations of other rules.