SEC Proposes Amendments to Enhance Private Fund Reporting

SEC Proposes Amendments to Enhance Private Fund Reporting

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On Jan. 26, 2022, the Securities and Exchange Commission (“SEC”) announced proposed changes to Form PF, the reporting form that certain SEC-registered investment advisers to private funds are required to submit on either an annual or quarterly basis. According to The Wall Street Journal, private fund assets have increased to $11.7 trillion in 2021 from $5.3 trillion in 2013, and the proposed amendments serve to increase the amount and timeliness of disclosures provided by the private funds required to file Form PF. Given the exclusive nature of private fund investing, transparency into this corner of the market has become more of an issue as it continues to grow.

Form PF was adopted in 2011 in response to the 2008 financial crisis, in an effort to increase regulatory oversight over private funds. As a result of analyzing Form PF data for a decade, the SEC “ha[s] identified significant information gaps and situations where we would benefit from additional information,” according to SEC Chairman Gary Gensler. The form requires funds to report net assets, borrowings, and derivative holdings, among other things, on either an annual or quarterly basis.

The proposed amendment would:

  • Require certain advisers to hedge funds and private equity funds to provide information such as extraordinary investment losses or significant margin and counterparty default events, or other events relevant to financial stability and investor protection. In the case of “significant stress that could harm investors or signal risk in the broader financial system,” according to the press release, filers could be required to file reports within one business day.
  • Adjust the reporting threshold for large private equity advisers. The current threshold is $2 billion in assets under management and could be decreased to $1.5 billion, causing many more advisers to qualify as a large private equity adviser.
  • Require more information regarding large private equity funds and large liquidity funds for the SEC’s use in risk assessment and regulatory programs.

The proposed amendments are not final. The public comment period for the proposed amendments is 30 days after publication in the Federal Register.

Read the SEC press release here, and the proposed rule here.

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Darren Mooney

Partner and Co-Head of Business Development

Darren Mooney is a Partner and the Co-Head of Business Development at Greyline. Before joining Greyline, Darren served as deputy chief compliance officer of Partner Fund Management where he held primary responsibility for the compliance program of the second-largest hedge fund in the Bay Area. Prior to that, Darren spent five years providing compliance consulting services at Cordium and then ACA Compliance Group, where he led the company’s San Francisco office and west coast operations. In addition to providing ongoing consulting services to a variety of investment managers, including hedge fund, private equity, venture capital, real estate, quantitative and other wealth managers, Darren also regularly guided clients through the SEC registration process, implemented tailored compliance programs, supported clients’ live SEC exams, and served as an SEC-mandated independent compliance consultant following an SEC enforcement action. Darren’s other experience includes serving as deputy chief compliance officer and associate counsel at F-Squared Investments where he directly supported the compliance program during the investigation and subsequent enforcement regarding historical advertising practices. Darren has a B.S. in Economics from the University of Delaware and a J.D. from Suffolk University Law School. He is a member of the Massachusetts bar.

Annie Kong

Partner and Head of Venture Capital
Annie Kong is a Partner and Head of the Venture Capital Division at Greyline. She provides ongoing compliance consulting to investment advisers and manages client relationships. Prior to joining Greyline, Annie was part of compliance and operations at a long-only manager-of-managers that advised pension fund clients. While there, she conducted compliance and operational due diligence on SEC-registered investment advisers on the platform. She also oversaw and counseled on various legal matters across the firm. Annie has a B.A. in Economics from the University of California, San Diego, and a J.D. from the University of San Diego School of Law. She is an active member of the State Bar of California.
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