Podcast Center
Video Center
Webcasts
Resource Center
Events
October 26, 2011 at 09:46 AM
The Securities and Exchange Commission on Wednesday adopted a rule to require advisors to hedge funds and other private funds with at least $150 million in assets to report information for use by the Financial Stability Oversight Council (FSOC) in monitoring risks to the U.S. financial system.
Under the new reporting requirements, only SEC-registered advisors with at least $150 million in private fund assets under management will be required to file a periodic reporting form, Form PF. Information reported on the Form PF—which is a joint effort of the SEC and Commodity Futures Trading Commission (CFTC)–will remain confidential.
These private fund advisors are divided by size into two broad groups–large advisors and smaller advisors. The amount of information reported and the frequency of reporting depends on the group to which the advisor belongs, the SEC said in announcing the rule.
SEC Chairman Mary Schapiro (left) noted during an SEC open meeting on Wednesday that Form PF would be “tiered” so that the SEC receives more detailed information from larger private fund advisors, rather than imposing the same reporting requirements for all private funds.
She said the minimum reporting requirement of $150 million is a change from the SEC’s original proposal “so that smaller private fund advisors would not be required to file the form, in part because these smaller advisors would have a minimal impact on a broad-based systemic risk analysis.”
Although the $150 million reporting threshold would apply to only about 230 U.S.-based hedge fund advisors, Schapiro said, “these advisors manage more than an estimated 80% of the assets under management. “
The private fund data collection is mandated by the Dodd-Frank Act.
Schapiro also noted that adopting Form PF “was the result of extensive and collaborative consultation with fellow FSOC members as well as coordination with international regulators.”
As a result, Schapiro said, “we have produced a document that will address the dramatic lack of private fund information available to regulators today while easing the burden on private fund managers producing the data, so that the same data collection approaches and protocols apply cross-border where appropriate.”
She went on to say that this private fund data collection initiative “follows from the lessons learned during the financial crisis–lessons about the importance of monitoring and reducing the possibility that a sudden shock or failure of a financial institution will cascade through the entire financial system.”
