Requirement to file Form PF
Types of private fund and private fund adviser
Information to be reported on Form PF
Comment period


On January 26 2011, pursuant to Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission jointly proposed rules to implement reporting requirements for advisers to private funds (including hedge funds, liquidity funds and private equity funds) under the Investment Advisers Act of 1940 and the Commodity Exchange Act. The proposed SEC rule would require investment advisers registered with the SEC(1) that advise one or more private funds to file Form PF with the SEC. Form PF is intended to gather information regarding private funds to assist the Financial Stability Oversight Council in monitoring systemic risk in the US financial system. Private fund advisers managing aggregate private fund assets of at least $1 billion would be required to report more detailed information on a quarterly basis, while private fund advisers managing assets of less than $1 billion would be required to report more limited information on an annual basis.

Requirement to file Form PF

Proposed Rule 204(b)-1 under the Investment Advisers Act would require that all private fund advisers report systemic risk information on proposed Form PF. In its proposing release the SEC stated that it does not intend to disclose publicly Form PF information that is identifiable to any particular private fund adviser or private fund, although it stated that it may use such information in enforcement actions. Additionally, the SEC will make Form PF information available to the Financial Stability Oversight Council, subject to the confidentiality requirements contained in the Dodd-Frank Act. Pursuant to the Dodd-Frank Act, information contained in Form PF will generally not be subject to a Freedom of Information Act request. The amount of information required to be reported by a private fund adviser would vary based on both the type and size of the private funds advised by the adviser.

Types of private fund and private fund adviser

For the purposes of Form PF, the SEC proposes to define 'hedge fund' as any private fund(2) that:

  • has a performance fee or allocation calculated by taking into account unrealised gains;
  • may borrow an amount in excess of half of its net asset value (including any committed capital) or may have gross notional exposure in excess of twice its net asset value (including any committed capital); or
  • may sell securities or other assets short.

A 'private equity fund' is proposed to be defined as any private fund that is not a hedge fund, liquidity fund(3) (which has separate reporting obligations under Form PF), real estate fund, securitised asset fund or venture capital fund, and does not provide investors with redemption rights in the ordinary course.

Private fund advisers to hedge funds and private equity funds that collectively have at least $1 billion in assets (as of the close of business on any day of the applicable quarter in the case of hedge funds, and as of the close of business on the last day of the applicable quarter in the case of private equity funds) will be defined as 'large private fund advisers' and will be subject to additional reporting requirements, described below.

Information to be reported on Form PF

Large private fund advisers would be required to file Form PF no later than 15 days after the end of each calendar quarter, while all other private fund advisers would be required to file Form PF on an annual basis no later than the last day on which the adviser may file its annual updating amendment to Form ADV (currently 90 days after the end of the adviser's fiscal year). Regardless of the frequency of reporting, all private fund advisers would be required to provide certain basic information (Section 1), while large private fund advisers would also be required to report more detailed information specific to their advised hedge funds (Section 2) and/or private equity funds (Section 4), as applicable. Reporting on Section 3 applies only to liquidity funds. The SEC proposed that large private fund advisers file their initial Form PF by January 15 2012.

Basic information
Section 1 of Form PF requires disclosure of certain identifying information about the private fund adviser and the private funds managed by the adviser (including total and net assets under management and the amount of those assets that are attributable to certain types of private fund). Private fund advisers would also be required to disclose:

  • each private fund's gross and net assets;
  • the aggregate notional value of its derivative positions;
  • basic information about its investor base;
  • performance information; and
  • information about the fund's borrowing.

Information related to borrowings to be disclosed includes a breakdown of borrowings based on whether the creditor is a US financial institution, a foreign financial institution or a non-financial institution, as well as the identity of, and amount owed to, each creditor to which the fund owed an amount equal to or greater than 5% of the fund's net asset value as of the reporting date. Section 1 will also require certain information about any hedge funds managed by the private fund adviser, including:

  • their investment strategies;
  • the percentage of the funds' assets managed using computer-driven trading algorithms;
  • significant trading counterparty exposures (including counterparty identities); and
  • trading and clearing practices.

Additional information for large private fund advisers to hedge funds
Section 2(a) of Form PF requires a large private fund adviser managing hedge funds to disclose aggregate information regarding the hedge funds that the adviser manages, including:

  • the market value of assets invested in different types of securities (on both a short and long basis);
  • the duration of fixed income portfolio holdings; and
  • the aggregate turnover rate of the funds' portfolios.

Large private fund advisers would also be required to indicate a geographic breakdown of their hedge funds' investments.

In addition, in Section 2(b) of Form PF, disclosure is proposed for each hedge fund advised by the large private fund adviser which has a net asset value of at least $500 million (as of the close of business on any day during the reporting period) (a 'qualifying hedge fund'), including for the purpose of such determination the value of any parallel managed account, parallel fund or fund that is a part of the same master-feeder arrangement. Unlike the aggregate general disclosure in Section 2(a), for qualifying hedge funds disclosure is made on a per-fund basis and requires details regarding each fund's portfolio liquidity, concentration of positions, collateral practices and the identity and clearing relationships with the three central clearing counterparties to which the fund has the greatest net counterparty credit exposure. Each qualifying hedge fund would also disclose:

  • if regularly calculated by the adviser, the fund's 'value at risk' metric for each month of the reporting period;
  • a monthly breakdown of secured and unsecured borrowings and derivatives exposure, as well as the value of all collateral and letters of credit supporting such borrowings and derivatives; and
  • information regarding sidepocket and any gating arrangements for investors.

Additional information for large private fund advisers to private equity funds
Section 4 of Form PF requires large private fund advisers to disclose information regarding each private equity fund that they manage. This information includes the outstanding balance of each fund's borrowings and guarantees and the weighted average of and range among the debt-to-equity ratios of the fund's controlled portfolio companies. Additional information regarding debt includes:

  • an overview of maturity for the debt of portfolio companies;
  • the portion of that debt that is comprised of payment-in-kind or zero coupon securities; and
  • whether the fund or any portfolio company has experienced an event of default on any debt during the reporting period.

The amount and identity of lenders of any portfolio company bridge financing must also be disclosed.

In an effort to monitor private equity investment in the financial industry, the SEC has also proposed disclosure of additional information regarding any portfolio company which is in that sector. Large private fund advisers to private equity funds would also be required to disclose the amount of their related persons' co-investment in portfolio companies and a breakdown of private equity fund investments by industry and geography.

Comment period

The SEC has requested comments on many of the provisions of the proposed rules and Form PF; comments must be received within 60 days of publication of the proposed rules in the Federal Register. A draft version of Form PF can be accessed on the SEC's website.(4)

For further information please contact David Wohl or Kristen Buppert at Weil, Gotshal & Manges LLP's New York office by telephone (+1 212 310 8000), fax (+1 212 310 8007) or email ([email protected] or [email protected]). Alternatively, please contact Joseph Bernardi at Weil, Gotshal & Manges LLP''s Boston office by telephone (+1 617 772 8300), fax (+1 617 772 8333) or email ([email protected]).


(1) Investment advisers not registered with the SEC (eg, those relying on the venture capital or foreign private adviser exemptions) need not file Form PF.

(2) The Dodd-Frank Act defined a 'private fund' as an issuer that would be an investment company under the Investment Company Act, but for the exceptions contained in Section 3(c)(1) or (7) of that act.

(3) The proposed Form PF would define a 'liquidity fund' as a private fund that seeks to generate income by investing in a portfolio of short-term obligations in order to maintain a stable net asset value per unit or minimise principal volatility for investors.

(4) Available at