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SEC Approves Private Fund Reporting Rule

Oct.27.2011

Yesterday, the SEC voted unanimously to adopt in final form Rule 204(b)-1 under the Investment Advisers Act.  Rule 204(b)-1 will require a variety of fund advisers (including advisers to hedge funds, private equity funds and liquidity funds) to provide information on Form PF to the SEC and the new Financial Stability Oversight Council.  The rule is to be adopted jointly with the CFTC, and the CFTC is expected to vote on its approval next week.  In the CFTC context, the rule will apply to commodity pool operators and commodity trading advisers.  Once the rule has been adopted by the CFTC, the full text of the rule and Form PF will be released. 

According to statements made at yesterday's SEC meeting and the SEC’s press release, the final rule includes a number of changes from January’s proposed form of the rule and Form PF, including a higher threshold for persons required to file the form (to limit the regulatory burden on smaller advisers), and an extension of the timing for compliance.  Rule 204(b)-1 will require SEC-registered advisers with at least $150 million in private fund assets under management to file Form PF.  There will be a two-stage phase-in for the Form PF filing requirement.  Advisers with at least $5 billion in assets must begin reporting following the end of their first fiscal year or fiscal quarter ending on or after June 15, 2012.  All other advisers have until the end of their first fiscal year or fiscal quarter ending on or after December 15, 2012. 

The type and extent of information required to be reported on Form PF, and the timing of filings, is dependent on the adviser’s assets under management – advisers with $1.5 billion in assets under management, liquidity fund advisers with at least $1 billion under management, and advisers with at least $2 billion under management, will all need to report more detailed information than smaller advisers.  These size thresholds are significantly larger than the original SEC proposal.  In addition, larger advisers will be required to report such information within 60 days following the end of each fiscal quarter, as opposed to 120 days following the end of the fiscal year for smaller advisers. The relaxation of these timing requirements addresses an important industry concern. 

The full text of the SEC's release regarding the new rule can be found here.  We will supplement this client alert with a more detailed description of the rule and Form PF once the final text of the rule and Form PF have been released. 

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For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Richard B. Holbrook Jr.
Partner – Washington, D.C.
Phone: +1 202.508.8779
Email: rholbrook@crowell.com
Jenny E. Cieplak
Counsel – Washington, D.C.
Phone: +1 202.624.2542
Email: jcieplak@crowell.com