Under the private funds regime a private fund must ensure that proper valuations of fund assets are carried out and there are procedures in place for the safekeeping of fund assets and cash monitoring. Generally, these obligations may be performed by an independent administrator, custodian, other third party, manager of the private fund, operator of the private fund or person in a control relationship with the manager.

Where the obligation is performed by the manager, operator or a person in a control relationship with the manager the potential conflict of interest must be properly identified and disclosed to the investors of the private fund.

The Cayman Islands government has expanded this specification to require the private fund to also manage and monitor any such conflicts of interest.

Please see our client alert for more details.