Private Funds: SEC proposed amendments to Form PF

SEC notes that, in the past five years, it has seen significant growth in the numbers of private funds (including funds commonly referred to as hedge funds and private equity funds) and the investment advisers that oversee and/or manage them. Investment advisers’ Form PF reporting has shown that the private fund industry is evolving in terms of business practices, complexity of fund structures, and investment strategies and exposures. The proposed “refresh” is intended to fill “significant information gaps” that would help the SEC and FSOC better understand “fast moving market events.” Should the Form PF amendments be finalized as proposed, large hedge fund advisers and private equity advisers would face increased reporting requirements. In the near term, given the SEC focus on private funds, SEC-registered investment advisers to private funds should anticipate heightened regulatory attention to their compliance programs in light of the Examinations Risk Alerts that call out fees and expenses, fairness, fiduciary duties, marketing disclosures, and conflicts of interest.