On May 3, 2023, the SEC adopted significant amendments to Form PF, the confidential reporting form used by certain SEC-registered investment advisers to private funds to report information to the SEC and the Financial Stability Oversight Council. The amendments include: (1) new quarterly event reporting requirements for advisers to private equity funds; (2) enhanced reporting requirements for large private equity fund advisers; and (3) new current reporting requirements for large hedge fund advisers. Certain of the amendments will require advisers to private funds to timely make non-routine filings with the SEC upon the occurrence of certain material events.

Generally, investment advisers registered (or required to be registered) with the SEC with at least $150 million in private fund assets under management as of the last day of the most recently completed fiscal year must file Form PF with the SEC. The Form PF amendments apply to three categories of advisers, as described below.

• New Quarterly Event Reporting for Private Equity Fund Advisers

All private equity fund advisers with at least $150 million in private fund assets under management will need to report on the occurrence of any of the following events within 60 days of the relevant fiscal quarter-end: (1) completion of an adviser-led secondary transaction; (2) general partner removals; and (3) investor elections to terminate a fund or its investment period.

• “Adviser-led secondary transaction” is defined as any transaction initiated by the adviser or any of its related persons that offers private fund investors the choice to: (1) sell all or a portion of their interests in the private fund; or (2) convert or exchange all or a portion of their interests in the private fund for interests in another vehicle advised by the adviser or any of its related persons. New Section 6, item B of Form PF will require private equity fund advisers to provide a brief description of the transaction and note the transaction’s closing date.

• Enhanced Reporting for Large Private Equity Fund Advisers

Any adviser having at least $2 billion in regulatory assets under management attributable to private equity funds as of the last day of the adviser’s most recently completed fiscal year (i.e., a large private equity fund adviser) will be subject to additional annual reporting requirements. Specifically, amended Section 4 of Form PF will require annual reporting by large private equity fund advisers on the implementation of: (1) any general partner clawback; or (2) a limited partner clawback (or clawbacks) in excess of an aggregate amount equal to 10 percent of a fund’s aggregate capital commitments. This reporting will include the effective date of the clawback and the reason for the clawback.

Other amendments to Form PF will collect information about private equity fund investment strategies, additional information about fund-level borrowing, more granular information about the nature of reported events of default and bridge financing to controlled portfolio companies, and changes to a question regarding a fund’s geographic breakdown of investments.

• New Current Event Reporting for Large Hedge Fund Advisers

Any adviser having at least $1.5 billion in regulatory assets under management attributable to hedge funds as of the end of any month in the prior fiscal quarter (i.e., a large hedge fund adviser) will be required to file a current report on Form PF as soon as practicable upon, but no later than 72 hours after, the occurrence of certain events that the SEC believes may indicate significant stress or otherwise serve as signals of potential systemic risk implications. Specifically, the reportable events include:

• Extraordinary investment losses (losses equal to or greater than 20% of a fund’s aggregate value calculated over a rolling 10 business day period);
• Significant margin and default events;
• The termination or material restriction of a prime broker relationship;
• Any significant disruption or degradation of the reporting fund’s critical operations, whether as a result of an event at a service provider to the reporting fund, its adviser or the fund itself;

1. For this purpose, “critical operations” means operations necessary for (1) the investment, trading, valuation, reporting and risk management of the reporting fund or (2) the operation of the reporting fund in accordance with federal securities laws and regulations.

• Large withdrawal and redemption requests, inability to satisfy redemptions or withdrawals requests and suspensions of redemptions or withdrawals.

1. Requests for withdrawals or redemptions exceeding 50% of the most recent net asset value (after netting against subscriptions or other contributions from investors received and contractually committed) will trigger the current reporting requirement.

Advisers to private funds should consider whether enhancements to their reporting and monitoring procedures and practices are appropriate to account for the new reporting requirements.

The new quarterly event reporting for all private equity fund advisers and current event reporting for large hedge fund advisers will be effective six months after publication of the final rule in the Federal Register. The enhanced annual reporting requirements for large private equity fund advisers will be effective one year after publication of the final rule in the Federal Register.

The SEC’s adopting release is available here and a related fact sheet is available here.