The SEC announced that it had approved rules jointly drafted with the CFTC that are designed to fulfill the Dodd-Frank Act mandate to collect information from advisers to hedge funds and other private funds as necessary for use by the Financial Stability Oversight Council (FSOC) in assessing systemic risk. The new private fund reporting rules will require periodic, confidential submission of private fund information to the SEC on new Form PF by SEC-registered advisers with at least $150 million in private fund assets under management. The CFTC also announced its approval of the joint rules, which direct registered commodity pool operators (CPOs) and commodity trading advisers (CTAs) that are also registered with the SEC to file any required private fund information with the SEC on Form PF. The joint rules also allow such jointly registered advisers to use Form PF to report information to the SEC with respect to commodity pools that would otherwise have to be reported to the CFTC. (Because of the timing of the SEC’s posting of the adopting release and Form PF, this article is based solely on the SEC’s and CFTC’s press releases announcing the adoption of Form PF. Goodwin Procter will provide more in-depth coverage of this development in a future publication.)
Reporting – Large Private Fund Advisers and Smaller Private Fund Advisers. The focus and frequency of reports on Form PF will depend on whether an adviser is a “large private fund adviser” or a “smaller private fund adviser.” An adviser is a large private fund adviser if it falls into one of the three following categories, each of which has its own particular reporting requirements:
Large hedge fund advisers (at least $1.5 billion in assets under management attributable to “hedge funds”) must make quarterly Form PF filings within 60 days of fiscal quarter-end updating information on hedge funds managed including (1) aggregate information regarding exposures by asset class, geographical concentration, and turnover by asset class and (2) for each hedge fund with a net asset value of $500 million or more, information relating to exposures, leverage, risk profile, and liquidity (but no position-level information).
Large liquidity fund advisers (at least $1 billion in combined assets under management attributable to “liquidity funds” and registered money market funds) must make quarterly Form PF filings within 15 days of fiscal quarter-end updating information for each liquidity fund with respect to (1) types of assets, (2) risk profile‑related matters, and (3) the extent to which the liquidity fund complies with conditions in Rule 2a-7 under the Investment Company Act of 1940 governing registered money market funds.
Large private equity fund advisers (at least $2 billion in assets under management attributable to “private equity funds”) must make annual Form PF filings within 120 days of fiscal year-end responding to questions focused primarily on the extent of leverage incurred by portfolio companies, the use of bridge financing, and investments in financial institutions.
All other advisers required to file Form PF are “smaller private fund advisers” that will have to file Form PF annually within 120 days of fiscal year-end, reporting only limited information for their private funds regarding size, leverage, investor types and concentration, liquidity and performance. A smaller private fund adviser managing hedge funds will also have to report information about fund strategy, counterparty credit risk, and use of trading and clearing mechanisms.
Compliance Dates. The following advisers will begin filing Form PF following their first fiscal year or fiscal quarter, as applicable, ending on or after June 15, 2012:
Advisers with at least $5 billion in assets under management attributable to hedge funds
Advisers with at least $5 billion in combined assets under management attributable to liquidity funds and registered money market funds
Advisers with at least $5 billion in assets under management attributable to private equity funds
All other private fund advisers will begin complying with Form PF requirements following the end of their first fiscal year or fiscal quarter, as applicable, ending on or after December 15, 2012.