The SEC has published a small entity compliance guide on reporting by investment advisers to private funds, certain commodity pool operators and commodity trading advisers. The SEC and the CFTC jointly adopted new reporting requirements on October 31, 2011 and new Form PF for filing the information with the SEC. The reporting requirements affect SEC-registered investment advisers with at least $150 million in private fund assets under management. The information that is collected by the SEC will be shared with the Financial Stability Oversight Council.
Private fund advisers that are also registered with the CFTC as commodity pool operators or commodity trading advisers will satisfy the CFTC's reporting obligations by filing Form PF. These advisers also may consolidate their reporting on Form PF with respect to private funds and non-private fund commodity pools.
The data that is reported to the SEC on Form PF will not be made publicly available in a manner that would identify a particular adviser or fund, but it may be used in an enforcement action.
The SEC-registered advisers that must report on Form PF are divided into two groups, with one for large and one for small advisers. Large private fund advisers are those with at least $1.5 billion in assets under management attributable to hedge funds; liquidity fund advisers with at least $1 billion in combined assets under management attributable to liquidity funds and registered money market funds; and advisers with at least $2 billion in assets under management attributable to private equity funds. All others will be considered smaller private fund advisers.
An investment adviser generally is a small business for purposes of the Investment Advisers Act and the Regulatory Flexibility Act if it has assets under management with a total value of less than $25 million; did not have total assets of $5 million or more on the last day of its most recent fiscal year; and does not control, is not controlled by, and is not under common control with another investment adviser that has assets under management of $25 million or more, or any person (other than a natural person) that had total assets of $5 million or more on the last day of its most recent fiscal year. Investment advisers that are defined as small businesses have no obligation to report on Form PF.
Advisers that have at least $150 million in private fund assets under management and do not exceed a large adviser threshold must file Form PF once a year within 120 days of the end of the fiscal year. These advisers will report only basic information about their size, leverage, investor types, concentration, liquidity and fund performance. Smaller advisers that manage hedge funds must report hedge fund-specific information about strategy, counterparty credit risk and the use of trading and clearing mechanisms.
Large private fund advisers have to provide more detailed information more frequently. Large hedge fund advisers must file Form PF to update information within 60 days of the end of each fiscal quarter. They must provide aggregated information with respect to their exposures by asset class, geographical concentration and turnover by asset class. For each managed hedge fund with a net asset value of at least $500 million, the advisers must report information about each fund's exposures, leverage, risk profile and liquidity.
Large liquidity fund advisers must file Form PF to update information about the funds they manage within 15 days of the end of each fiscal quarter. The information must include the types of assets in each of the liquidity fund's portfolios, risk profile information and the extent to which the fund has a policy of complying with Investment Company Act Rule 2a-7.
Large private equity fund advisers will file Form PF annually within 120 days of the end of the fiscal year. These funds must respond to questions about the extent of the leverage incurred by their funds' portfolio companies, the use of bridge financing and investments in financial institutions.
The guide outlines the two-stage phase-in period for the Form PF filing requirements. Most private fund advisers will begin filing Form PF following the end of their first fiscal year or fiscal quarter, as applicable, that ends on or after December 15, 2012.
Advisers with at least $5 billion in assets under management attributable to hedge funds; liquidity fund advisers with at least $5 billion in combined assets under management attributable to liquidity funds and registered money market funds; and advisers with at least $5 billion in assets under management attributable to private equity funds must begin filing Form PF after the end of their first fiscal year or fiscal quarter that ends on or after June 15, 2012.
This post was contributed by my colleague Jacquelyn Lumb.