The SEC recently proposed new rules to require SEC-registered investment advisers who manage one or more private funds to submit periodic reports for use by the new Financial Stability Oversight Counsel (FSOC), which was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act to monitor systemic risk. Investment advisers would need to file a new Form PF either annually or quarterly depending on the amount of assets under management. Advisers with $1 billion or more in assets under management will be considered large private fund advisers. All other private fund advisers will be considered smaller private fund advisers.
Large private fund advisers would need to file the Form PF quarterly and report different information based on whether the adviser manages hedge funds, liquidity funds (i.e., unregistered money market funds) or private equity funds. The form would be due within 15 days of quarter end, with a first filing due January 15, 2012. Large hedge fund advisers would report exposure by asset class, geographical concentration and turnover, and, for hedge funds of $500 million or more, investments, leverage, market position, risk profile and liquidity. Large liquidity fund advisers would report types of portfolio assets, risk profile and compliance with Investment Company Act rules regulating registered money market funds. Large private equity fund advisers would report leverage, bridge financing and investment in financial institutions.
Smaller private fund advisers would only need to file the Form PF annually. The form would be due within 90 days of year end, with a first filing due March 31, 2012. They would report information regarding leverage, credit providers, investor concentration and fund performance. If the smaller private fund adviser has hedge funds under management, information regarding fund strategy, counterparty credit risk and use of trading and clearing mechanisms is also required.
As the information is sensitive, all submitted data on the Form PF will remain confidential. The rules were proposed jointly by the SEC and the Commodity Futures Trading Commission (CFTC), and the proposed CFTC rule requires commodity pool operators and commodity trading advisers to file the Form PF with the SEC. The period for public comment on these proposed rules ends 60 days after publication of the proposed rules in the Federal Register.
The Dodd-Frank Act created exemptions from SEC registration under the Investment Advisers Act for advisers solely to venture capital funds and for advisers solely to private funds that in the aggregate have less than $150 million in assets under management in the United States. Under the proposed rules, these exempt investment advisers would not be required to file Form PF.