Speed Read

The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) recently adopted a joint Final Rule (the Final Rule) requiring advisers to private funds to periodically report information about themselves and their funds to the SEC on Form PF. Although the main purpose of Form PF filings is to give the Financial Stability Oversight Council (FSOC) data to use in monitoring systemic risks to the U.S. financial system, the SEC and other regulatory bodies may use the data for other purposes, including enforcement actions.  

Advisers will be required to disclose information about their funds, including detailed information about the value and types of assets under management and fund performance. Most advisers will need to file on an annual basis, and will have 120 days after the end of each fiscal year to complete the filing; most advisers' first filing will need to be completed by April 30, 2013. Advisers to hedge funds, along with advisers to large hedge (USD1.5 billion), liquidity (USD1.5 billion), and private equity (USD2 billion) funds are required to provide additional information about these funds by filing additional sections of Form PF. Advisers to large hedge and liquidity funds must also file on a quarterly basis.

Although the SEC recognizes the importance of keeping this highly sensitive data confidential, it has not yet proposed details for how it will do so, and may delay the effectiveness of Form PF if it cannot create an adequate confidentiality scheme.

For practical guidance on what advisers should start doing before the rule becomes effective, please see the Regulatory Point section below and the summary chart of reporting requirements for advisers to large funds.


The SEC and CFTC adopted the Final Rule implementing reporting requirements for investment advisers to private funds and certain commodity pool operators (CPOs) and commodity trading advisors (CTAs). The Final Rule fulfills the Dodd-Frank Wall Street Reform and Consumer Protection Act's (Dodd-Frank Act) mandate to the SEC to establish reporting and recordkeeping requirements for advisers to private funds.  

The Final Rule requires advisers to certain private funds to file Form PF with the SEC. Form PF provides regulators with extensive information regarding each fund and its investments. The main purpose of collecting this data is to facilitate FSOC's monitoring of systemic risk in U.S. financial markets. Form PF is not intended to reflect a determination of where risks exist, but rather to provide FSOC with sufficient data to determine the extent to which advisers to funds pose risks to the U.S. financial markets and understand how these risks should be assessed. However, data may also be used for other purposes, including SEC or CFTC enforcement actions.

Although the basic requirements in the Final Rule are the same as those in the proposed rule, the Final Rule includes a number of changes which respond to industry concerns. The time allotted to advisers to file Form PF after the end of each reporting period has been lengthened, and some of the information requirements have been altered so as to correspond more closely to information already collected by advisers or to make the reporting less onerous. In addition, the SEC did not adopt the proposed rule's requirement that advisers provide a certification under penalty of perjury that the information on Form PF is true and correct. Under the Final Rule, advisers will simply need to sign confirming that the Form PF is filed with proper authority. This change was adopted in consideration of the nature of the information required on Form PF, which includes estimates and requires advisers to exercise significant judgment in preparing responses.

Which Funds Are Subject To The Rule?

An adviser must file Form PF if it meets three requirements:

  • First, it must be (i) registered or required to register with the SEC as an investment adviser, or (ii) an investment adviser that is dually registered with the CFTC as a CPO or CTA. Therefore, advisers which are exempt from registration do not need to file.1
  • Second, the adviser must advise one or more private funds. A private fund is defined as an issuer that would be an investment company but for the exceptions in sections 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940.
  • Third, the adviser must have, together with its related persons, at least USD150 million in regulatory assets under management attributable to private funds as of the end of its most recently completed fiscal year. The definition of "assets under management" can be found in Form ADV. Advisers should aggregate assets of private funds advised by the adviser's related persons (other than related persons that are separately operated) and parallel managed accounts (assets of managed accounts advised by the firm that pursue substantially the same investment objective and strategy and invest in substantially the same position as private funds advised by the firm, unless the value of those accounts exceeds the value of the private funds).  

Form PF also provides that if an adviser's principal office and place of business is outside the United States, the adviser does not need to report on any private fund that, during the adviser's last fiscal year, was not (i) a United States person, (ii) was not offered in the United States, and (iii) was not beneficially owned by any United States person.

Information To Be Provided

All advisers required to file Form PF must complete Sections 1a and 1b, which include general identifying information about the adviser and the funds it advises. Advisers will need to disclose, among other information, the total and net assets under management, each fund's gross and net assets, aggregate notional value of each fund's derivative positions, a summary of each fund's assets and liabilities, and monthly and quarterly performance information for each fund. All advisers of hedge funds (as defined below) must also complete Section 1c, which includes information about the fund's strategy, the five counterparties to which the fund has greatest exposure, and use of trading and clearing mechanisms (e.g. the percentage of securities that were traded on a regulated exchange or over the counter). In addition, advisers to large hedge, liquidity, and private equity funds must complete additional sections of Form PF. These requirements are discussed below and described in detail in the chart at the end of this alert.


Information on Form PF must be updated on an annual basis, although large hedge and liquidity fund advisers must file on a quarterly basis. Fund advisers generally have 120 days from the end of the fiscal year to complete the filing. Advisers to large hedge funds must file within 60 days of each fiscal quarter, and advisers to large liquidity funds must file within 15 days from the end of each fiscal quarter. Large private equity fund advisers file on an annual basis, and must file within 120 days of the end of each fiscal year.

The compliance date for Form PF is December 15, 2012. Therefore, most fund advisers must complete their first Form PF filing by April 30, 2013. Advisers to very large hedge, liquidity, and private equity funds (with at least USD5 billion in assets under management) will need to complete their first filing in the summer of 2012. Please refer to the chart at the end for additional information on this requirement for very large fund advisers.

Additional Reporting Requirements For Large Fund Advisers

Advisers to large hedge, liquidity, and private equity funds are required to provide additional information by filing additional sections of Form PF. This requirement applies to advisers with at least USD1.5 billion in hedge fund assets, at least USD1 billion in liquidity fund assets, and at least USD2 billion in private equity fund assets. Advisers should aggregate funds using the method used to determine whether they meet the USD150 million reporting threshold.

"Hedge fund" is defined as any private fund (a) with respect to which one or more investment advisers (or their related persons) may be paid a performance fee or allocation calculated by taking into account unrealized gains (other than a fee or allocation the calculation of which may take into account unrealized gains solely for the purpose of reducing such fee or allocation to reflect net unrealized losses); (b) that may borrow an amount in excess of one-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 (c) that may sell securities or other assets short or enter into similar transactions (other than for the purpose of hedging currency exposure or managing duration). Commodity pools that are reported or required to be reported on Form PF are categorized as hedge funds; vehicles for issuing asset-backed securities are expressly excluded from the definition of hedge fund.

"Liquidity fund" is defined as any 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 minimize principal volatility for investors. "Private equity fund" is defined as any private fund that is not a hedge fund, liquidity fund, real estate fund, 2 securitized asset fund,3 or venture capital fund4 and does not provide investors with redemption rights in the ordinary course.  

One important change under the Final Rule is that hedge and liquidity funds will be required to measure assets under management at the end of each month, rather than on a daily basis. Please see the chart at the end of this alert for more details of these additional filing requirements.


The SEC recognized in its comments to the Final Rule that information reported on Form PF must be kept confidential, and highlighted several actions that it believes will help ensure confidential treatment. First, the SEC does not intend to make public Form PF information that could identify any particular adviser or private fund. Second, agencies with access to Form PF data are exempted by the Dodd-Frank Act from being compelled under the Freedom of Information Act to disclose this information to the public. Third, the data reported on Form PF will be less current under the Final Rule than under the proposed rule, since advisers have been given more time after each reporting period to file Form PF. The SEC believes that less current data will be less sensitive, and the results of any breach of confidentiality would therefore be less severe.  

The SEC did not, however, provide information regarding specific safeguards to protect Form PF data either internally or when data is shared with other agencies or self-regulatory organizations. The SEC is considering a variety of methods proposed by commentators to protect the data, including storing identifying information using a code, limiting the ability to transfer Form PF data by email or portable media, limiting access to personnel who "need to know," and sharing data with other regulators only in aggregated and anonymous form. The SEC will review the systems and controls in place in advance of the compliance date, and will consider delaying the compliance date for Form PF if sufficient progress has not been made regarding confidentiality controls.

Funds Regulated By The CFTC

A CPO or CTA that is also registered or required to register with the SEC as an investment adviser and meets the threshold criteria for filing must file Form PF with respect to any commodity pool it manages that meets the definition of a “private fund.” Such CPOs or CTAs are also permitted to file Form PF with respect to any commodity pool they manage that is not a “private fund.” A CPO that files Form PF for commodity pools that are “private funds” will be deemed to have satisfied certain CFTC filing requirements.

Regulatory Point

Although most advisers will not need to file an initial Form PF until 2013, simply identifying which sections of Form PF may apply could be a substantial undertaking. First, advisers will need to identify each of the funds they manage and determine what type of fund each is for purposes of Form PF. Advisers will also need to determine whether they advise any hedge, liquidity, or private equity fund that triggers the threshold for large funds, which would subject the advisers to the additional reporting requirements detailed in the below chart. As this can be a significant undertaking, especially for advisers to large fund complexes, advisers should begin considering how they plan to comply with the requirements under Form PF. In order to ensure that they are able to meet their reporting obligations under Form PF, advisers will need to develop new internal policies and procedures. For example, the policies and procedures should address who will be responsible for identifying all the private funds managed by the adviser and how that person or business group will determine which fund category the funds fall into on a ongoing basis. The policies and procedures should also address how advisers plan to track the information required to be reported for the relevant fund categories, and what internal controls will be implemented to ensure the accuracy of reported information.

Additional Filing Requirements For Advisers to Large Hedge, Liquidity, and Private Equity Funds

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