What You Need to Know
- SEC and FSOC have identified significant information gaps, Gensler said.
- Reporting of extraordinary investment losses or significant margin and counterparty default events would be required.
- Peirce said the enhanced reporting seems intended primarily to provide the SEC with more information to support its regulatory and enforcement programs.
The Securities and Exchange Commission on Wednesday proposed to amend Form PF, the confidential reporting form for certain SEC-registered investment advisors — like hedge funds and private equity funds — to private funds.
The proposed amendments would require current reporting on key events and would decrease the reporting threshold for large private equity advisors and require them to provide additional information to the SEC about the funds they advise, according to the agency.
The securities regulator also proposed to amend requirements concerning how large liquidity advisors report information about the liquidity funds they advise.
The proposal, explained SEC Chairman Gary Gensler, does three things:
- Requires certain advisers to hedge funds and private equity funds to provide current reporting of events that could be relevant to financial stability and investor protection, such as extraordinary investment losses or significant margin and counterparty default events.
- Updates the periodic reporting by large private equity advisers; and
- Updates reporting by large liquidity fund advisers to correspond with reporting the Commission recently proposed for money market funds.
“I support today’s proposal because, if adopted, it would help federal regulators to assess systemic risk, including the Financial Stability Oversight Council, the SEC, the Federal Reserve Board, and others,” Gensler said. “It also would bolster the Commission’s oversight of private fund advisers and the protection of investors in those funds.”
Form PF, adopted in 2011, “sheds light on a growing part of the financial sector that was not transparent to regulators: these private funds,” Gensler said.
Form PF provides the Commission and FSOC “with important, confidential information about the basic operations and strategies of private funds and has helped establish a baseline picture of the private fund industry for use in assessing systemic risk,” Gensler said.