Hedge funds face more disclosures as SEC adopts FormPF amendments

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Large hedge fund managers will now have to make more disclosures about their investment activities after the US Securities and Exchange Commission (SEC) yesterday voted to adopt a series of amendments to FormPF, the confidential reporting form for certain SEC-registered investment advisers to private funds. 

The SEC says the amendments are designed to enhance the ability of the Financial Stability Oversight Council (FSOC) to assess systemic risk and to bolster the Commission’s oversight of private fund advisers and its investor protection efforts.

In a three-to-two vote split along party lines, the SEC’s commissioners voted to adopt the amendments, which will require large hedge fund advisers – those with at least $1.5bn in assets under management – and all private equity fund advisers to file current reports upon the occurrence of certain reporting events that could indicate significant stress at a fund or investor harm. Reporting events for large hedge fund advisers include certain extraordinary investment losses, significant margin and default events, terminations or material restrictions of prime broker relationships, operations events, and events associated with withdrawals and redemptions. 

Large hedge fund advisers must file these reports as soon as practicable, but not later than 72 hours from the occurrence of the relevant event. Reporting events for private equity fund advisers include the removal of a general partner, certain fund termination events, and the occurrence of an adviser-led secondary transaction. Private equity fund advisers must file these reports on a quarterly basis within 60 days of the fiscal quarter end.

“In the 12 years since the Commission first adopted Form PF, private funds have evolved significantly in their business practices, complexity, and investment strategies,” said SEC Chair Gary Gensler. “Private funds today are ever more interconnected with our broader capital markets. They also nearly have tripled in size in the last decade. This makes visibility into these funds ever more important. Today’s amendments to Form PF will enhance visibility into private funds and help protect investors and promote financial stability.”

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