Hedge funds and private equity advisers with more than $150 million in assets under management that have registered with the SEC as investment advisers now have to begin filing Form PF with the SEC as required by the Dodd-Frank Act.  Compliance dates depend on the type of private fund adviser and assets under management.

The SEC has issued a set of frequently asked questions on Form PF.  Some of the highlights include:

  • Some private funds would be categorized as a private equity fund, except for the fact that the fund documents allow the fund to either employ large amounts of leverage or sell assets short. Some of those funds do not in fact, nor do they intend to, incur leverage or short any assets.  Notwithstanding the intent and practice of these private funds, they must be classified as a hedge fund for Form PF reporting purposes.
  • The categorization of a private fund as a hedge fund may change from reporting period to reporting period.  With respect to any fiscal quarter, a private fund should be categorized as a hedge fund if it met the definition of a hedge fund as of the last day of any month in the fiscal quarter immediately preceding the fund’s most recently completed fiscal quarter.
  • Under CFTC interpretations, a private fund that holds a single commodity interest position may be a commodity pool. Advisers however are not required to treat a private fund as a commodity pool if such private fund’s commodity interest positions satisfy either of the de minimis tests in Regulation 4.13(a)(3)(ii) issued by the CFTC. Accordingly, advisers only have to categorize such a private fund as a hedge fund if it otherwise meets the definition of a hedge fund (i.e., it may charge a performance fee, employ large amounts of leverage, or sell assets short).

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