On May 3, 2023, the SEC adopted amendments to Form PF, which is the confidential reporting form for certain SEC-registered investment advisers to private funds. These amendments aim to enhance the ability of the Financial Stability Oversight Council’s (FSOC) to assess systemic risk and improve the SEC’s oversight of private fund advisers, as well as its efforts to protect investors. Given the growth and increasing complexity of private funds over the past decade, these amendments are designed to increase visibility into these funds and support financial stability.

Key points to note from the amendments include:

Event-triggered reporting 

Large hedge fund advisers and all private equity fund advisers will now be required to file current reports in response to specific reporting events. These events might indicate significant stress at a fund or potential harm to investors.

• For large hedge fund advisers, these events include extraordinary investment losses, significant margin and default events, terminations or material restrictions of prime broker relationships, operations events, and events linked to withdrawals and redemptions. Such reports must be filed as promptly as possible, but no later than 72 hours from the occurrence of the event.
• For private equity fund advisers, these events include the removal of a general partner, certain fund termination events, and the occurrence of an adviser-led secondary transaction. These reports must be filed on a quarterly basis within 60 days of the fiscal quarter end.

Annual reporting 

Large private equity fund advisers will now be required to report information on general partner and limited partner clawbacks annually. Additionally, they must provide more information on their strategies and borrowings as a part of their annual filing.

The amendments for event-triggered reporting will become effective six months after the publication of the adopting release in the Federal Register, which will likely be in November 2023, and the remaining amendments will become effective in May of 2024.

Advice

We recommend starting preparations to comply with these new amendments soon given their significant impact on reporting requirements for hedge fund and private equity fund advisers.

Valerie Ruppel advises investment advisers and wealth managers on daily operational matters that need to comply with US regulatory requirements. She is an expert in regulatory filings, development and implementation of compliance policies and procedures, annual compliance reviews and regulatory mock exams.

Before joining Bovill, Valerie was an Attorney-Adviser at the US Securities and Exchange Commission in the Division of Examinations where she conducted examinations of registered investment advisers and registered investment companies for compliance with federal securities laws, rules and regulations.