The SEC’s Division of Examinations has published its Examination Priorities for Fiscal Year 2027, and at first glance the adviser section reads like a rerun: fiduciary duty, compliance programs, never-examined firms, cybersecurity. Private funds don’t even get their own heading. But the single paragraph aimed at private fund advisers is more pointed than anything around it, and paired with a June 2026 risk alert on economic conflicts, it tells PE managers precisely where examiners plan to dig.
The message for private equity: examiners are not stopping at the fund. Your disclosures, controls and fee math now need to hold up at the portfolio company level, too.
Two Levels Deep: Fund and Investment
The key language is in the fiduciary duty section. When examining private fund advisers, staff will test whether investment-related risk disclosures are consistent with fiduciary standards, and whether policies and controls address both fund-level and investment-level risks. The Division names its examples: certain investments and allocations, use of debt and fund-level lines of credit, affiliated service providers, and the accuracy of fee and expense calculations at both the fund and investment levels.
For a PE sponsor, “investment level” means the portfolio company. That puts monitoring and transaction fees, offset mechanics, operating partners and in-house professionals billed to portcos, and captive consulting or operations groups squarely in scope. Subscription facilities are named too, so expect questions on how you disclose their effect on reported IRR and how interest expense is allocated.
Candidly, most PE fee testing we see stops at the fund ledger. If your offset calculation lives in a spreadsheet only your CFO can explain, that spreadsheet is the exam.
Economic Conflicts Are the Real Headline
The Division says it will prioritize advisers’ fiduciary obligations around economic conflicts of interest: fee rebates, fee and expense calculations, cash management and quid pro quo arrangements, among others. The footnote points to the Division’s June 9, 2026 risk alert, Examination Observations of Investment Adviser Obligations Related to Economic Conflicts of Interest, which catalogs undisclosed or misleadingly disclosed conflicts and practices that departed from advisory agreements.
Treat that risk alert as the examiners’ workplan. In PE, the translation is vendor rebates and group purchasing programs, related-party transactions with portfolio companies, and any arrangement where the sponsor or its affiliates are paid by something the fund owns.
This matters more, not less, after the Fifth Circuit vacated the Private Fund Adviser Rules in National Association of Private Fund Managers v. SEC (2024). With no prescriptive rule to point to, examiners lean on fiduciary duty, Section 206(4) and Rule 206(4)-7. The standard is whether disclosure was full and fair and whether your procedures were actually followed, which is harder to satisfy with a checklist.
Change Is an Exam Trigger
The compliance program section flags advisers that have changed their business — new client types, new asset classes, new services — or grown through mergers, acquisitions or geographically dispersed offices. Examiners will ask whether the compliance program kept pace and whether new conflicts were identified.
That describes a large share of the mid-market right now. Launching a private credit sleeve, running a first continuation vehicle, adding an evergreen product for wealth channels, or acquiring a platform all qualify. Notably, the priorities separately list loans made by private funds among the illiquid, harder-to-trade products that draw extra scrutiny.
Never-examined and recently registered advisers remain a priority as well. If you crossed the registration threshold or moved off exempt reporting adviser status in the last few years, plan on a first exam that tests the whole program, with conflicts identification front and center. Examiners will also typically review your annual compliance review, so it should show, in writing, how the program adapted to whatever changed.
Reg S-P Is Live for Everyone, and “SI” Is the New AI
With the smaller-entity compliance date for the amended Regulation S-P having passed on June 3, 2026, FY2027 is the first exam cycle in which every RIA is on the hook. Examiners will evaluate incident response programs, customer notification procedures and service provider oversight. For private equity sponsors, that means your fund administrator, investor portal and IT vendors, with contracts and diligence files to match.
The Division also intends to review Regulation S-ID programs, focusing on account takeovers and fraudulent transfers. Many PE advisers have concluded they hold no covered accounts. That may be right, but document the analysis rather than assume it.
On cyber, the Division now uses the term super intelligence (SI) and specifically calls out SI-generated phishing and deepfake voice and video used for social engineering. Translate that to your capital call and distribution wire process. If a convincing call from your “CFO” could change wiring instructions, fix it before an examiner, or a fraudster, finds it.
Lessons for Private Equity Fund Managers
- Push fee and expense testing below the fund. Sample portfolio company charges, offsets and affiliated provider fees against the LPA, side letters and PPM.
- Map your conflicts against the June 2026 risk alert. Each economic conflict should trace to a specific disclosure and a control someone actually performs.
- Refresh subscription line disclosures. Cover IRR effects, interest allocation and capital call timing.
- Paper the change. New strategy, new vehicle or new acquisition? Your annual review should say how the program adapted.
- Tabletop your Reg S-P response program, and add callback verification to every wire instruction change.
One more item: the Division recently released a new SEC Exam Handbook that replaces the old exam brochure. It’s a useful read for whoever will run point when the document request arrives.
How Trillium Can Help
Trillium’s Compliance Health Checks for PE managers are built around exactly this year’s focus: we test fee and expense allocations at both the fund and portfolio company level, trace each economic conflict to its disclosure and control, and hand you a findings memo before the SEC writes one.