Form PF Amendments Adopted | SEC Releases
SEC Releases
Introduction
The SEC adopted amendments to Form PF on February 8th, 2024.
Their goal is to enhance reporting by large hedge fund advisers to assist regulators in identifying trends, monitoring and assessing systemic risk, and lessening the burden on advisers.
The amendments become effective one year after they are published in the Federal Register, and that same date will be the compliance date.
Who Is This Applicable To?
- Private Fund Advisers (SEC and CFTC Registered)
Amendments Adopted
- Reporting for Large Hedge Fund Advisers
- Applies to Funds with a net asset value of at least $500 million.
- Certain aggregated information previously required has been removed.
- Enhanced reporting on important information such as:
- Investment exposures.
- Borrowing and counterparty exposures.
- Market factor effects.
- Currency exposure.
- Turnover.
- Country and industry exposure.
- Central clearing counterparty reporting.
- Risk metrics.
- Investment performance strategy.
- Portfolio liquidity.
- Financing and investor liquidity.
- Reporting for Fund Advisers and their Private Funds
- Additional information will be required about Advisers and their Funds:
- Identifying information.
- AUM.
- Withdrawal and redemption rights.
- Gross and net asset value.
- Inflows and outflows.
- Base currency.
- Borrowings.
- Types of creditors.
- Fair value hierarchy.
- Beneficial ownership.
- Fund performance.
- Additional information will be required about Advisers and their Funds:
- Hedge Fund Reporting
- Detailed reporting on Form PF will include:
- Investment strategies.
- Counterparty exposures.
- Trading and clearing mechanisms.
- Duplicate questions will be removed to help focus information for regulators.
- Detailed reporting on Form PF will include:
- Reporting of Complex Structures
- Each component Fund of a Master-Feeder arrangement and parallel Fund structure will typically require separate reporting.
- Advisers will need to identify trading vehicles used by reporting Funds.
- Reporting will be on an aggregated basis.
Takeaways From Commissioner Statements
- Chair Gary Gensler
- The size and influence of Private Funds has significantly increased since Form PF was implemented.
- It is essential that regulators have enough insight into the systemic risks.
- Commissioner Hester Peirce
- Peirce dissents from the expansion of information under Form PF.
- The concerns for systemic risk have no limiting principle, so the Form PF has morphed into a concerning information gathering tool.
- Commissioner Mark Uyeda
- Important criticisms received in the public comment period have been dismissed.
- The amendments to Form PF reveal no limiting principle to the concerns of systemic risk and could cause significant damage if the information were discovered or leaked by the public.
Vigilant’s Conclusion
These amendments will likely have a significant impact on the Private Fund industry.
It is important that Advisers are fully aware of the resources that may be required to remain in Compliance.
As Private Funds see the need to invest in their Compliance Programs, Vigilant is prepared to provide the support that will be needed. Reach out to us today with any questions.