The Dodd-Frank Act established the Financial Stability Oversight Council, or FSOC, for the purpose of monitoring risks to the stability of the U.S. financial system.  Working with other regulators, FSOC will gather information from many sectors of the financial system for this purpose. In order to assist FSOC in this process, the Dodd-Frank Act directs the SEC to collect information from advisers to hedge funds and other private funds as necessary for FSOC’s assessment of systemic risk. The SEC and CFTC have adopted Form PF to implement this requirement.

Form PF elicits non-public information about private funds and their trading strategies, the public disclosure of which could adversely affect the funds and their investors. The SEC does not intend to make public Form PF information identifiable to any particular adviser or private fund, although the SEC may use Form PF information in an enforcement action. The Dodd-Frank Act amends the Investment Advisers Act to preclude the SEC from being compelled to reveal this information except in very limited circumstances. Similarly, the Dodd-Frank Act exempts the CFTC from being compelled under FOIA to disclose to the public any information collected through Form PF and requires that the CFTC maintain the confidentiality of that information consistent with the level of confidentiality established for the SEC in section 204(b) of the Investment Advisers Act. The Commissions will make information collected through Form PF available to FSOC, as the Dodd-Frank Act requires, subject to the confidentiality provisions of the Dodd-Frank Act.

The Dodd-Frank Act contemplates that Form PF data may also be shared with other Federal departments or agencies or with self-regulatory organizations, in addition to the CFTC and FSOC, for purposes within the scope of their jurisdiction.  In each case, any such department, agency or self-regulatory organization would be exempt from being compelled under FOIA to disclose to the public any information collected through Form PF and must maintain the confidentiality of that information consistent with the level of confidentiality established for the SEC in section 204(b) of the Investment Advisers Act.  Prior to sharing any Form PF data, the SEC also intends to require that any such department, agency or self-regulatory organization represent to the SEC that it has in place controls designed to ensure the use and handling of Form PF data in a manner consistent with the protections established in the Dodd-Frank Act.

Certain aspects of the Form PF reporting requirements also help to mitigate the potential risk of inadvertent or improper disclosure. For instance, because data on Form PF generally could not, on its own, be used to identify individual investment positions, the ability of a competitor to use Form PF data to replicate a trading strategy or trade against an adviser is limited.  In addition, the deadlines for filing Form PF have, in most cases, been significantly extended from the proposal.

In addition, the SEC staff is working to design controls and systems for handling of Form PF data in a manner that reflects the sensitivity of this data consistent with the confidentiality protections established in the Dodd-Frank.  This will include programming the Form PF filing system with appropriate confidentiality protections.

In advance of the compliance date for Form PF, SEC staff will review the controls and systems in place for the use and handling of Form PF data.  SEC staff is also carefully considering the other recommendations of commenters in designing controls and systems for Form PF. Depending on the progress at that time toward the development and deployment of these controls and systems, the SEC will consider whether to delay the compliance date for Form PF.

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