August 22, 2022
For the first time since January 2022, the SEC held an open meeting as a full five-member Commission and voted 3-2 to propose sweeping amendments to Form PF, jointly with the CFTC. Form PF, the confidential form filed by private fund advisers that have at least $150 million in private fund assets under management, was adopted by both agencies in 2011 under the Dodd-Frank Act’s provisions related to systemic risk. The proposal would significantly expand the types and amount of information that private fund advisers would be required to report to the agencies, and that will be shared with the Financial Stability Oversight Council (FSOC). The reported information would be kept confidential to the extent permitted by the statute.
Despite the breadth of the proposal, the SEC is again providing very little time for public input, once again giving stakeholders only 60 days from publication of the proposal on the SEC’s website (or October 11, 2022), or 30 days from publication in the Federal Register, whichever is later.
For example, under the proposal, advisers would need to report separately, with few exceptions, each component fund of a master-feeder arrangement and parallel fund structure. They would also need to report detailed information on a fund’s trading vehicles, including position sizes and counterparty exposure, as well as the value of a reporting fund’s investments in other private funds, unless instructed otherwise.
Hedge fund advisers would need to report their investment strategies, including relating to digital assets, and also provide information about counterparty exposures and trading and clearing mechanisms. The proposal would require additional information from advisers to large hedge funds with a net asset value of at least $500 million.
The proposal includes several other significant changes as well.
The SEC proposed different amendments in January 2022 to those parts of the Form that it does not “share” with the CFTC. These amendments would require one business-day reporting upon the occurrence of key events, decrease the reporting threshold for large private equity advisers and require additional information about their private equity funds, and change how large liquidity advisers report information about the liquidity funds they advise. The IAA weighed in on the January Form PF proposal, calling on the SEC to modify that proposal to more directly target systemic risk and policy concerns. The SEC has not yet acted on those amendments.
The IAA plans to work with our members to develop feedback on this proposal. Please contact Monique Botkin, IAA Associate General Counsel, at monique.botkin@investmentadviser.org if you are interested in helping with our efforts.
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