February 10, 2022
Provident Investment Management, Inc. has been a registered investment advisor for over 40 years. Several years ago, we opened a long-short hedge fund. Our fund already undergoes an annual audit which is a considerable expense, but a necessary one.
I disagree with the contention that this rule would \"promote more efficiency, competition, and transparency in this field.\" Significantly increasing compliance costs will reduce competition as only well-funded sponsors will be able to introduce private funds. Adding cost will not promote efficiency either. Certain aspects of the rule will, however, enhance transparency and some will address outright abuses such as treating some investors differently without proper disclosure.
There is a relatively simple fix to keep the good without the unintended consequences of squelching competition. If the interest is truly in promoting efficiency and competition, the rule should be amended to apply to funds of a certain size. It will stifle competition if the same rules are applied to a fund just beginning as a fund or fund complex managing tens or hundreds of billions of dollars.