On January 26, 2022, the Securities and Exchange Commission (“SEC”) voted 3-1 to propose amendments to Form PF1. The Form PF, which was initially adopted in 2011 and became effective on June 15, 2012, is a confidential report which certain SEC-registered private fund advisers must file with the Financial Stability Oversight Council (“FSOC”).
The Form PF is intended to assist the FSOC with respect to its obligations under the Dodd-Frank Act to monitor and assess systemic risks to the U.S. financial system and to provide regulators additional data to support their examinations, investigations and investor protection efforts. The amount of information reported in and the frequency of filing the Form PF varies, depending on both the types of funds the relevant adviser manages and the amount of the adviser’s regulatory assets under management (“AUM”).
SEC Chair Gary Gensler, who has indicated his support for the proposed amendments, stated the SEC and FSOC “now have almost a decade of experience analyzing the information collected on Form PF. We have identified significant information gaps and situations where we would benefit from additional information.”2
The proposed amendments are summarized in the SEC’s 236 page Release No. IA-59503. Key proposals would:
The sole dissenting vote to the proposed amendments was cast by Commissioner Hester Pierce, who stated that, “Today’s proposal…represents a fundamental shift in Form PF’s scope and purpose” and “Form PF’s purpose is to facilitate FSOC’s monitoring of system-wide stability, not to inform the Commission about isolated trigger events affecting individual private funds.”6
The amendments’ focus on enhancing oversight and regulation of private fund advisers is consistent with recent statements made and risk alerts issued by the SEC.7 Market participants and the general public are invited to submit comments to the proposed amendments which can be done online8. The comment period for the proposed amendments will remain open for 30 days.
7 See Foley’s previous articles: “Private Equity and Hedge Funds Should Expect More SEC Scrutiny Ahead” and “Observations from Examinations of Private Fund Advisers”