Securities and Exchange Commission Amends Form Pf: What You Need to Know

• Jurisdiction: United States,Federal
• Citation: Vol. 1 No. 6
• Publication year: 2023
• topic: Securities Law

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John P. Beals, Benedict Kwon, Matthew Bobrow, and Marc Zhang ^*

In this article, the authors discuss amendments made by the Securities and Exchange Commission to Form PF.

The U.S. Securities and Exchange Commission (SEC) has adopted amendments to Form PF ¹ to (1) require event reporting for large hedge fund and private equity fund advisers, and (2) to amend reporting requirements for large private equity fund advisers (the Amendments). The goal of the Amendments is to allow the SEC to collect more data from Form PF to better assess systemic risks, market weaknesses, and potential areas for investor harm and decide whether they need to propose more regulations for the industry as it continues to grow.

The amendments cover three main areas to enhance the transparency of the SEC's regulations on private funds:

■ Quarterly private equity event reports for all private equity fund advisers (Section 6; effective December 11, 2023); ²
■ Large private equity fund adviser reporting for advisers having at least $2 billion in assets under management (AUM) (Section 4; effective June 11, 2024); and
■ Current reporting for large hedge fund advisers having at least $1.5 billion in AUM that has qualifying hedge funds with a net asset value (NAV) of at least $500 million (Section 5; effective December 11, 2023).

Quarterly Private Equity Event Reports for All Private Equity Fund Advisers

In Section 6 of Form PF, the SEC adopted changes to the required quarterly reports, which now require all private equity fund ³ advisers to file the reports ⁴ with the SEC within 60 days after

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the end of their fiscal quarters upon the occurrence of the below events.

Adviser-Led Secondary Transactions

Any transaction initiated by the adviser or any of its related persons that offers private fund investors the choice to (1) sell all or a portion of their interests in the private fund, or (2) convert or exchange all or a portion of their interests in the private fund for interests in another vehicle advised by the adviser or any of its related persons. The SEC argued that any adviser-led secondary transactions might reflect a deviation from the traditional life cycle of a private equity investment, which may indicate that the portfolio is struggling and needs to restructure.

Removal of General Partner or Election to Terminate the Investment Period or Fund

Upon an adviser receiving notification of the investors' decision to:

■ Remove the adviser or an affiliate as the general partner or similar control person of a fund,
■ Terminate the fund's investment period, or
■ Terminate the fund, in each case as contemplated by the fund documents.

The SEC believes these are uncommon but avoidable events had there been other solutions. Another aspect of concern for the SEC is that these events are likely to create conflicts of interest, which would ultimately harm the investors.

Large Private Equity Fund Adviser Reporting

In Section 4 of Form PF, the SEC adopted amendments relating to reporting by large private...