INVESTMENT ADVISERS—SEC approves amendments to Form PF; expands reporting requirements for fund advisers - 04 May 2023

The amendments advance the filing timeline in the case of a significant event, requiring large hedge fund advisers to report as soon as practicable but no later than 72 hours from its occurrence.

The SEC adopted amendments to Form PF, the confidential reporting form for certain SEC-registered advisers to private funds. The reporting changes are designed to provide the Financial Stability Oversight Council (FSOC) with more timely information to assess systemic risk, and to boost the Commission’s oversight of private fund advisers and its investor protection efforts, the SEC said.

The amendments passed by a 3-2 vote, with Commissioners Hester Peirce and Mark Uyeda voting against their approval. Commissioner Peirce commented that the expansion of Form PF data collection “is the latest reflection of the Commission’s unquestioning faith in the Benevolent Power of More, a faith that I do not share.”

Fund advisers’ requirements. The final form amendments apply to large hedge fund advisers with at least $1.5 billion in hedge fund assets under management; private equity fund advisers with at least $150 million in private equity fund assets under management; and large private equity fund advisers with at least $2 billion in private equity assets under management.

The amendments will require large hedge fund advisers and all private equity fund advisers to file current reports upon the occurrence of certain events that could indicate significant stress at a fund or investor harm. Large hedge fund advisers must file these reports not later than 72 hours from the occurrence of the relevant event.

The SEC said “trigger” events for large hedge funds include certain extraordinary investment losses, significant margin and default events, terminations or material restrictions of prime broker relationships, operations events, and events associated with withdrawals and redemptions.

Reporting events for private equity fund advisers include the removal of a general partner, certain fund termination events, and the occurrence of an adviser-led secondary transaction. Private equity fund advisers must file these reports on a quarterly basis within 60 days of the fiscal quarter-end.

The amendments also require large private equity fund advisers to report information on general partner and limited partner clawbacks on an annual basis as well as additional information on their strategies and borrowings as a part of their annual filing.

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