Executive Summary
Event Reporting and Other May 2023 Changes
In May 2023, the U.S. Securities and Exchange Commission published final rules and rule amendments for Form PF to require event reporting if certain events occur and to require private equity fund advisers to provide additional information in their regular Form PF filings.
Large hedge fund advisers are required to complete and file the new Section 5 of Form PF if any of the following occurs with respect to any qualifying hedge fund that it advises:
- Extraordinary investment losses;
- Significant margin, collateral or equivalent increases;
- Receipt of notice of margin default or a determination of the qualifying hedge fund’s inability to meet a call for margin, collateral or equivalents;
- A counterparty defaults;
- A prime broker relationship is terminated or materially restricted;
- A significant disruption or degradation of the qualifying hedge fund’s critical operations;
- Significant cumulative calls for withdrawals and redemptions; or
- Inablility to pay redemption requests or suspension of redemptions.
If one of these events occurs, the large hedge fund adviser must file the Section 5 of Form PF with the SEC as soon as practicable, but no later than 72 hours after the occurrence of the event.
Separately, private equity fund advisers are required to file a quarterly event report as set out in Section 6 of the Form PF if with respect to any private equity fund it advises:
- The reporting fund closes an adviser-led secondary transaction; or
- The investors of the reporting fund, in accordance with the requirements of the reporting fund’s governing documents, elect to:
- Remove the general partner;
- Terminate the reporting fund’s investment period; or
- Terminate the reporting fund.
Private equity event reports are due within 60 calendar days following the end of the calendar quarter in which the reportable event occurred, provided the event occurred on or after the compliance date.
In addition to the new event reporting requirements, the SEC has amended Section 4 of the Form PF to require private equity fund advisers to provide certain additional information.
A full summary of the applicable requirements can be accessed here.
The Joint Data Proposals
In August 2022, the SEC (in conjunction with the U.S. Commodity Futures Trading Commission ("CFTC")) published a second set of proposed changes to the Form PF covering the parts of the Form PF that are the joint jurisdiction of the SEC and the CFTC. The August Proposals contain sweeping changes to the provisions related to:
- Treatment of master feeder funds;
- Look throughs, aggregation and definitions with specific look through requirements;
- Fund performance reporting;
- Counterparty and creditor disclosures for all funds other than qualifying hedge funds;
- Disclosure of the monthly aggregate reporting fund exposures (long and short) by sub-asset class;
- Currency exposure;
- Netted exposures;
- Detailed reporting regarding reference assets;
- Counterparty and creditor disclosures for qualifying hedge funds;
- Portfolio correlation and volatility calculations; and
- Monthly and quarterly performance reporting.
If you would like to read more about the requirements under this proposal, you can access our August 23, 2022 summary of the joint data proposal.
Please contact Jennifer Wood with any questions regarding these new requirements or the pending joint data proposals.
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Jennifer Wood
Managing Director, Global Head of Asset Management Regulation & Sound Practices
Timeline
AIMA has categorized these proposals as High Priority/Medium Impact and they are therefore represented in bright pink in the AIMA Regulatory Horizon Scan gantt chart.
Estimated Compliance Date for Joint Data3 | October 10, 2024 | **New** |
Effective/Compliance Date for Section 3 changes and May 2023 changes other than Sections 5 & 6 |
June 11, 2024 | |
Effective/Compliance Date for Event Reporting Sections 5 & 6 | December 11, 2023 | |
Estimated Adoption Date for Joint Data1,2 | October 11, 2023 | **New** |
Launch of Event Reporting Implementation Guide | September 13, 2023 | |
Final Section 3 reporting requirements for large liquidity fund advisers published | July 12, 2023 | |
Federal Register version of event reporting requirements published | June 12, 2023 | |
Final event reporting requirements published | May 3, 2023 | |
Comment deadline for joint data proposal | October 11, 2022 | |
AIMA/ACC response to joint data proposal filed | October 11, 2022 | |
Joint trades request for extension of joint data proposal submitted | September 14, 2022 | |
AIMA/ACC summary of joint data proposal | August 23, 2022 | |
Joint data proposal published by SEC/CFTC | August 10, 2022 | |
Comment deadline for current reporting proposal | March 21, 2022 | |
AIMA/ACC response to current reporting proposal filed | March 21, 2022 | |
Joint trades request for extension of current reporting proposal submitted | March 1, 2022 | |
AIMA/ACC summary of current reporting proposal | February 4, 2022 | |
Current reporting proposal published by SEC (which included changes affecting large liquiidty fund advisers) |
January 26, 2022 |
1 Subject to change. We have estimated an adoption date based on the number of outstanding Division of Investment Management proposals scheduled for completion in the second half of 2023 according to the SEC's Spring 2023 Regulatory Flexibility Agenda. As the weeks pass, these dates will shift and become more compressed until either the year end has passed or new information becomes available. Of course, this is only an estimate and may move forward or backward as actual matters develop depending on the priorities of the SEC and CFTC. These estimates have been provided solely to allow people to visualize the potential overlaps in compliance burdens for multiple pending rules at the same time.
2 Subject to change. The effective date for the joint data final rules has been estimated as the same day as publication since this was the method chosen for the event reporting requirements and the more recently published private fund adviser rules.
3 Subject to change. We have estimated a compliance period of one year although the joint data proposal is silent on the question of compliance periods.
Implementation Guide
AIMA in conjunction with Citco and K&L Gates LLP has prepared the Form PF Event Reporting Implementation Guide
The Guide discusses the new Form PF event reporting requirements, key questions and challenges as well as advance planning that members can perform prior to the implementation of these requirements, effective on December 11, 2023.
This new reporting poses significant challenges to the industry and its members, with a short reporting timeframe and introduction of new reporting concepts. The aim of this Guide is to explain the key concepts in detail from those impacting large hedge fund advisers to those for private equity and liquidity fund advisers.
Click HERE to access the guide.
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