The US Securities and Exchange Commission is to hold a vote today (Wednesday) on whether or not to adopt proposed new rules that would require hedge funds and private equity funds to promptly report major market events, according to a report by Reuters.
The US Securities and Exchange Commission (SEC) is to hold a vote today (Wednesday) on whether or not to adopt proposed new rules that would require hedge funds to, among other things, promptly report major market events, according to a report by Reuters.
The SEC says the new rules – an update to the so-called Form PF, which was put in place following the financial crisis of 2008-2009 to monitor risks in the private fund sector – is aimed at increasing transparency, competition, and efficiency in the $25-trillion private funds marketplace.
The report quotes SEC Chair Gary Gensler as saying at conference held by the Managed Funds Association on Tuesday, that: “Since the SEC put in place Form PF 12 years ago, a lot has changed. The proposal’s new transparency would relate to fees, expenses, performance, and side letters.”
The rule changes would require hedge funds and private equity firms to include specific details about their fees and expenses in quarterly reports to investors. The SEC has also proposed banning the firms from giving preferential treatment for certain investors, charging fees for services that aren’t actually performed, or limiting liability for breaching a fiduciary duty.
Large hedge fund advisors would also have to inform financial regulators on certain events that may indicate significant stress or otherwise signal for systemic risk and investor harm, which could include significant margin calls of counterparty defaults, based on a 2022 SEC proposal.