SEC Adopts Form PF to Help Monitor Systemic Risk

On October 26, 2011, the SEC unanimously adopted new Rule 204(b)-1 under the Advisers Act, which requires all SEC-registered investment advisers with at least $150 million in private fund assets under management to report systemic risk information to the SEC on Form PF. The information provided on Form PF will be used by the Financial Stability Oversight Council (FSOC) for the purposes of monitoring risks affecting the stability of the U.S. financial system. Form PF will not be made available to the public, but may be shared with regulators, including the SEC, CFTC and FSOC.

Under the new Form PF reporting requirements, private fund advisers are divided into two groups—large private fund advisers and smaller private fund advisers. Large private fund advisers include: (1) advisers with at least $1.5 billion in assets under management attributable to hedge funds; (2) advisers with at least $2 billion in assets under management attributable to private equity funds; and (3) advisers with at least $1 billion in combined assets under management attributable to liquidity funds (i.e., unregistered money market funds) and registered money market funds. All other advisers to private funds are deemed as small private fund advisers.

Smaller private fund advisers are required to file Form PF once a year within 120 days of their fiscal year-end, which will include basic information regarding size, leverage, types and concentration of investors, liquidity and performance of the private funds they advise. In addition, information about fund strategy, counterparty credit risk, and use of trading and clearing mechanisms must be reported.

Large private fund advisers must provide similar and more frequent detailed information depending on whether the adviser manages hedge funds, liquidity funds or private equity funds as detailed below: 

  • Large hedge fund advisers—Form PF must be filed quarterly within 60 days of the end of each fiscal quarter and must report, on an aggregated basis, information regarding geographical concentration, exposures by asset class, and turnover by asset class. In addition, for each hedge fund with a net asset value of at least $500 million, advisers must report information relating to exposures, leverage, risk profile, and liquidity.
  • Large liquidity fund advisers—Form PF must be filed quarterly within 15 days of the end of each fiscal quarter and must provide information on the types of assets in each liquidity fund portfolio, information relevant to the risk profile of the fund, and the extent to which the fund complies with Rule 2a-7 under the Investment Company Act (relating to registered money market funds).
  • Large private equity fund advisers— Form PF must be filed annually within 120 days of the end of the fiscal year and must provide information relating to the extent of leverage incurred by portfolio companies, the use of bridge financing, and investments in financial institutions.

Most private fund advisers will begin filing Form PF for fiscal periods ending on or after December 15, 2012. Those with $5 billion or more in private fund assets must begin filing Form PF following the end of fiscal periods ending on or after June 15, 2012. For additional information on Form PF and the new reporting requirements, please contact Zac Rosenberg, Compliance Consultant, at or 619-278-0020.

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