The SEC’s Amendments to Form PF

The US Securities and Exchange Commission (SEC) on 3 May 2023 released amendments to Form Private Fund (Form PF) to enhance the reporting requirements of SEC-registered investment advisors to private funds. Form PF was initially introduced by the SEC as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in response to the 2008 financial crisis.

Form PF is a regulatory filing requirement established by the SEC to gather information on private investment funds, particularly hedge funds and other private funds managing significant assets. Its main aim is to enhance the SEC’s oversight of the private fund sector, promote transparency and monitor potential risk.

Who needs to file Form PF

According to the SEC, “A private fund is an entity created to pool money from multiple investors that is not required to be registered or regulated as an investment company under the Investment Company Act.”

The filing requirements generally apply to hedge fund managers, private equity fund managers and other advisors to large private funds that are registered or are required to register with the SEC or the Commodity Futures Trading Commission (CFTC) as a commodity pool operator (CPO)/commodity trading advisor (CTA). Reporting depends on the size of the advisor’s assets under management (AUM) in the private fund.

The following are the primary thresholds:

• Private equity fund advisors with at least USD150m in AUM
• Large liquidity fund advisors with at least USD1bn in AUM
• Large hedge fund advisors with at least USD1.5bn in hedge fund AUM
• Large private equity fund advisors with at least USD2bn in AUM

Amendments to Form PF

According to the SEC, the amendments to Form PF will enhance “the Financial Stability Oversight Council’s (FSOC’s) ability to monitor systemic risk and bolster the commission’s regulatory oversight of private fund advisors”.

• Require current reporting by large hedge fund advisors regarding certain events that may indicate significant stress at a fund that could harm investors or signal risk in the broader financial system
• Require enhanced reporting by large private equity fund advisors to improve the ability of the FSOC to monitor systemic risk and improve the ability of both the FSOC and the commission to identify and assess changes in market trends at reporting funds
• Require quarterly event reporting by all private equity fund advisors regarding certain events that could raise investor-protection issues
• Require annual filing by large equity fund advisors on information related to general-partner and limited-partner clawbacks and additional information on their strategies and borrowings

Timeframe to file

• Any investment losses, significant margins, counterparty default events and large withdrawal and redemption requests must be filed as soon as practicable, but not later than 72 hours after they occur
• Quarterly reporting should be filed within 60 days of the end of each fiscal quarter

Conclusion

Amendments to the reporting timeline and additional disclosure required increase the compliance burden on private fund advisors, necessitating revamping internal reporting policies, which could be expensive and cumbersome. The increased likelihood of enforcement action would result in additional costs being passed down to private fund investors. For more information regarding Form PF, refer to the SEC’s website and FAQs.

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