• SEC Issues Annual Report on Form PF Disclosures
  • September 11, 2014
  • Law Firm: Sutherland Asbill Brennan LLP - Washington Office
  • On August 15, 2014, the SEC’s Division of Investment Management (IM) issued its second annual report summarizing data collected through Form PF filings. What the report makes clear is that the SEC is using, not just collecting, data collected from Form PF filers in a number of ways across the agency and intends to continue to do so in the future.

    Form PF is filed by investment advisers managing at least $150 million in private funds assets. Among other things, the report provides insight into the size of the private fund industry. As of May 7, 2014, Form PF filers reported managing approximately $8.871 trillion in regulatory assets under management attributable to private funds, including 7,790 hedge funds, 7,004 private equity funds, and 1,397 real estate funds, all of which are increases from the 2013 report.

    In addition to providing statistical data, the report focuses on the SEC’s uses of the data: (i) examinations and investigations; (ii) risk monitoring; (iii) guidance to Form PF filers; and (iv) working with other regulators and international organizations.

    In connection with examinations, the Office of Compliance Inspections and Examinations (OCIE) uses the data to identify inconsistences with other information obtained during examinations, such as due diligence reports, and to detect discrepancies in public filings, such as Form ADV. According to the annual report, OCIE also uses the data to confirm that the information in Form PF matches what is disclosed to investors, “particularly with respect to holdings, leverage, liquidity, derivatives and counterparties.” The report notes that deficiency letters may result from such inconsistencies. Additionally, the Division of Enforcement uses the information in connection with ongoing investigations and as part of its Aberrational Performance Inquiry.

    With respect to risk monitoring, OCIE uses data collected to identify advisers engaged in activities of regulatory interest, such as exposures, valuation and high-frequency trading, as well as to help identify red flags, trends and emerging risks.

    The report also notes that IM uses the information to inform policy and rulemaking as well as to provide guidance on Form PF issues. In addition, the SEC staff has shared Form PF data with other regulators in connection with FSOC’s systemic risk initiative and with the International Organization of Securities Commissions.