In a unanimous vote, the SEC adopted Rule 204(b)-1 under the Investment Advisers Act of 1940. The rule was first proposed by the SEC in January 2011. Rule 204(b)-1 requires certain advisers to hedge funds and other private funds (such as private equity funds) to report information for use by the Financial Stability Oversight Council in monitoring risks to the U.S. financial system.

Rule 204(b)-1 implements Section 404 and 405 of the Dodd-Frank Act. SEC-registered investment advisers with at least $150 million in private fund assets under management will be required to periodically file Form PF, a new reporting form. All information reported on Form PF will be given confidential treatment. SEC Chairman Mary L. Schapiro said "[t]he data collection form that we have adopted will address the dramatic lack of private fund information available to regulators today while easing the burden on private fund managers producing the data."

Form PF is a joint effort of the SEC and the Commodity Futures Trading Commission. The CFTC is expected to vote on adopting the reporting requirements within the next week. It is anticipated that once the joint reporting requirements are approved by the CFTC, private fund advisers required to file Form PF that are also registered with the CFTC as operators of commodity pools or commodity trading advisors may file Form PF to comply with certain reporting requirements that the CFTC may adopt in the future.

Private fund advisers are divided into two groups depending on the amount of assets under management. The amount of information that is required to be filed on Form PF and the frequency of Form PF filings depends upon whether the fund adviser is a "large private fund adviser" or a "smaller private fund adviser." Large private fund advisers are divided into three subcategories: advisers with at least $1.5 billion in assets under management attributable to hedge funds ("Large hedge fund advisers"), liquidity fund advisers with at least $1 billion in combined assets under management attributable to liquidity funds and registered money market funds ("Large liquidity fund advisers") and advisers with at least $2 billion in assets under management attributable to private equity funds ("Large private equity fund advisers"). All other advisers are smaller private fund advisers.

Smaller private fund advisers are required to file Form PF annually within 120 days after the end of the fiscal year. The information a smaller private fund adviser is required to report includes only limited information relating to fund size, use of leverage, investor types, investment concentration, liquidity and fund performance.

 Large private equity fund advisers are required to file Form PF annually within 120 days after the end of the fiscal year. Large private equity fund advisors must report on the extent of leverage incurred by their portfolio companies, the use of bridge financing, and investments in financial institutions.

Large hedge fund advisers are required to file Form PF within 60 days following the end of each fiscal quarter. Large hedge fund advisers must report (on an aggregated basis) information regarding exposures by asset class, geographical concentration and turnover by asset class. If a hedge fund adviser manages a fund with a net asset value of at least $500 million, it must report information relating to that fund's risk profile, leverage, liquidity and exposures. Large hedge fund advisers will not be required to disclose position-level information.

Large liquidity fund advisers are required to file Form PF within 15 days following the end of each fiscal quarter. Large liquidity fund advisers must report on the types of assets in each of their liquidity fund's portfolios, information relevant to the risk profile of the fund and the extent to which the fund has a policy of complying with all or aspects of Investment Company Act Rule 2a-7 (dealing with registered money market funds).

Compliance with the filing requirements of Form PF will be phased-in with most private fund advisers required to begin filing Form PF following the end of their first fiscal year or fiscal quarter ending on or after December 15, 2012. Large private fund advisers with at least $5 billion in assets under management will be required to begin filing Form PF following the end of their first fiscal year or fiscal quarter ending on or after June 15, 2012.