Certain Investment Advisers’ Obligations to File Form PF


Under a rule recently adopted by the Securities and Exchange Commission (PDF), various SEC-registered investment advisers that manage private funds will be obligated to periodically file new Form PF.  The rule and the Form have been adopted to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The information provided by the filed Form will be used by the Financial Stability Oversight Council (the “FSOC”) and other regulatory agencies to assess systemic risks to the United States financial system that may be posed by private funds.

The requirement to file Form PF with the SEC is imposed only on an SEC-registered investment adviser advising one or more “private funds” – a private investment fund relying on the Section 3(c)(1) or the Section 3(c)(7) exemption from registration under the Investment Company Act of 1940, as amended – with at least $150 million of assets.  The type and the scope of the information that must be provided in the Form PF, and how often the Form PF must be filed, by an adviser depends on the size and the type of the private fund or private funds that it advises.

Each adviser obligated to file Form PF that does not fall within one of the categories of a large adviser described below must provide basic information on Form PF and file it within 120 days after the end of the adviser’s fiscal year.  The basic information to be reported includes gross and net assets of each fund, fund-performance data, fund borrowings and information regarding certain creditors and certain beneficial ownership of each fund.  A “large adviser” that advises a private fund meeting one of the following criteria must provide specified kinds of information, in addition to the basic information, by filing Form PF at the following times:

  • Hedge fund* with at least $1.5 billion of assets – within 60 days after the end of each fiscal quarter of the adviser.
  • Liquidity fund* with at least $1 billion of assets – within 15 days after the end of each fiscal quarter of the adviser.
  • Private equity fund* with at least $2 billion of assets – within 120 days after the end of the adviser’s fiscal year.

In general, the additional detailed information to be provided in Form PF by a large adviser regarding:

  • A hedge fund (with at least $500 million of assets) focuses on its exposures (including derivative positions), leverage, risk profile and liquidity.
  • A liquidity fund focuses on its exposures, borrowings and investor concentrations and withdrawals and redemptions.
  • A private equity fund focuses on its portfolio-company leverage, bridge financings and investments in financial institutions.

The obligation to file Form PF will become applicable in two stages:

  • A large adviser advising any one type of fund  (i.e., hedge fund, liquidity fund or private equity fund) with at least $5 billion of assets must file its first Form PF after its first fiscal quarter or fiscal year, as applicable, ending on or after June 15, 2012.
  • Any other adviser must file its first Form PF after its first fiscal quarter or fiscal year, as applicable, ending on or after December 15, 2012.

The information provided by a  filed Form PF will not be available to investors or the public.  On a confidential basis, the SEC will provide such information to the FSOC and may share such information with other governmental regulatory agencies and self-regulatory organizations.  The SEC may also use the information in connection with its examinations of, and enforcement actions against, advisers.

OUR TAKEAlthough the deadline for filing the initial Form PF is now many months away, the information that may be required to be provided in Form PF is extensive and detailed.  Accordingly, advisers subject to the filing requirement should promptly begin to review the Form and the information and processes that will be necessary to prepare and file it.


* A “hedge fund” is a private fund that has a performance fee or allocation calculated by taking into account unrealized gains; may borrow an amount in excess of one-half of its net asset value (including any committed capital) or may have gross notional exposure in excess of twice its net asset value (including any committed capital); or may sell securities or other assets short.

A “liquidity fund” is a private fund that seeks to generate income by investing in a portfolio of short-term obligations in order to maintain a stable net asset value per unit or minimize principal volatility for investors (e.g., a money-market fund).

 A “private equity fund” is a private fund that is not a hedge fund, liquidity fund, real estate fund, securitized asset fund or venture capital fund and does not provide investors with redemption rights in the ordinary course.

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