On Could 3, 2023, the Securities and Alternate Fee (SEC) adopted amendments to Type PF.
Type PF is the “confidential reporting type for sure SEC-registered funding advisors to personal funds” that “offers the Fee and the Monetary Stability Oversight Council (FSOC) with essential, confidential details about the fundamental operations and methods of personal funds.”
The amendments to Type PF will assist the FSOC monitor systemic threat and the SEC and FSOC consider materials adjustments in market developments amongst massive hedge funds, non-public fairness funds, and huge non-public fairness funds.
Do these amendments apply to you?
The shape amendments apply to you if you’re:
- A big hedge fund advisor (i.e., a hedge fund advisor with at the very least $1.5 billion in hedge fund property beneath administration);
- A non-public fairness fund advisor (i.e., an funding advisor with at the very least $150 million in non-public fairness fund property beneath administration); or
- A big non-public fairness fund advisor (i.e., a non-public fairness fund advisor with at the very least $2 billion in non-public fairness property beneath administration.
Giant hedge funds. First, the amendments require, for the primary time, that enormous hedge fund advisors to qualifying hedge funds “report as quickly as practicable upon, however no later than 72 hours after” the prevalence of set off occasions — i.e., occasions that the SEC believes “could point out vital stress or in any other case function indicators of potential systemic threat implications or as potential areas of inquiry in order to mitigate investor hurt.”
Examples of set off occasions for giant hedge funds embrace:
- Extraordinary funding losses,
- Important margin and default occasions,
- Terminations or different materials restrictions of prime dealer relationships,
- Operations occasions and occasions related to withdrawals and redemptions.
Personal fairness funds. Second, the amendments require, for the primary time, that every one non-public fairness fund advisors file an occasion report “upon the prevalence of a number of set off occasions inside 60 days of every fiscal quarter finish.”
Examples of set off occasions for personal fairness funds embrace:
- The elimination of a basic accomplice,
- Sure fund termination occasions, and
- The prevalence of an advisor-led secondary transaction.
Giant non-public fairness funds. Lastly, the amendments introduce extra annual reporting necessities for giant non-public fairness fund advisors, together with:
- Along with their present annual reporting, massive non-public fairness fund advisors are actually required to report “extra detailed info concerning sure actions of personal fairness funds which are essential to the evaluation of systemic threat and for the safety of buyers,” like info relating “to any basic accomplice or restricted accomplice clawback that occurred through the previous yr.”
- Moreover, massive non-public fairness fund advisors should give extra info concerning fund methods and the usage of leverage.
Efficient and Compliance Dates
The amendments to Type PF will grow to be efficient contemporaneously with the compliance dates. New sections 5 and 6 will grow to be efficient 180 days after the date of publication of the ultimate rule within the Federal Register. For the amended present sections, the efficient/compliance date is three hundred and sixty five days after the date of publication within the Federal Register. The ultimate rule has not but been revealed within the Federal Register.
© 2023 ArentFox Schiff LLPNationwide Legislation Evaluate, Quantity XIII, Quantity 133